Daqo New Energy downgraded at Goldman on weaker poly price outlook
Daqo New Energy (NYSE:DQ) -4.3% in Monday's trading after Goldman Sachs downgraded shares to Neutral from Buy with a $70 price target, seeing current risk/reward as balanced given a moderated poly price outlook.
As a leading maker of polysilicon with an 18% share of the global market in 2021, Daqo New Enegy (DQ) is a key beneficiary of the current high poly price level due to slower than expected poly capacity expansion and thus tight supply, and rapid capacity expansion should help Daqo (DQ) gain market share, Goldman's Chao Ji said, noting the company has offered strong guidance on FY 2022 shipments.
But due to capacity expansion in the industry, poly prices started to decrease in November 2022, which the analyst believes could weigh on Daqo's (DQ) margin, seeing the stock now fairly valued comparing its historical valuation multiple to the average of the past three down-cycles.
Taking a different view, Juxtaposed Ideas believes Daqo New Energy (DQ) is trading at "absurdly dirt cheap valuations," and the stock has "an insanely massive runway for growth," according to an analysis posted recently on Seeking Alpha.