Long-term fears about steel capacity have created a short-term opportunity to buy Cleveland-Cliffs stock.

On Tuesday, Wells Fargo analyst Timna Tanners upgraded shares of Cliffs to Buy from Hold. She raised her price target to $14 a share from $12.

Tanners believes that second-half 2026 and 2027 earnings before interest, taxes, depreciation, and amortization (Ebitda) can "materially exceed" the Wall Street consensus.

Wall Street projects about $1.3 billion in combined second- and third-quarter Ebitda, as well as $2.3 billion in 2027 Ebitda. Cliffs generated $5.3 billion in Ebitda in 2021. That was the best year in recent history for Cliffs. Benchmark steel prices peaked at about $1,900 per metric ton. Prices started 2026 at about $900 per ton and have risen to about $1,300 per ton.

Cliffs stock was up 0.7% at $12.30 in early trading after the upgrade, while the S&P 500 was up 0.8%.

"We consider this upgrade a tactical call, as we think the steel pricing cycle is near a peak, but benefits to Cleveland-Cliffs have lagged," added Tanners.

The tactical call can work partly because of the stock's starting point. Shares traded to about $11 a share this past week and remain down about 5% from levels before President Trump announced his support for a new steel plant in Iowa.

Mesabi Metallics plans to build a $15 billion fully integrated steelmaking facility in Iowa. In this case, integration means the new plant would make everything from pig iron to finished steel. Eventually, the plant might produce eight or nine million tons of finished steel annually.

That's significant for the U.S. industry. America makes about 80 million to 90 million tons of steel annually and imports 20 million to 25 million tons. New capacity can replace imports and serve new demand from higher manufacturing output. But new capacity also can upset the balance between supply and demand.

Still, the new mill won't be completed for years. For now, Cliffs stock can trade based on Ebitda generation in 2026 and 2027.

Overall, 25% of analysts covering Cliffs stock rate its shares Buy. The average Buy-rating ratio for S&P 500 stocks typically ranges from about 55% to 60%.

It's a low Buy-rating ratio, but it's started to improve. In the summer, only two analysts rated shares Buy. Now, four do.

The average analyst price target for Cliffs stock is about $13. A year ago, the average target price was about $12.