DQ: Persistent Margin Pressure Will Limit Upside Despite Projected Earnings Recovery

The analyst price target for Daqo New Energy has been raised significantly, from $28.53 to $30.81, as analysts note improved operating cash flow, higher polysilicon prices, and expectations for earnings growth despite recent margin pressures.

Analyst Commentary

Recent analyst reports on Daqo New Energy highlight both promising developments and lingering uncertainties as the company navigates volatile market conditions.

Bullish Takeaways

• Bullish analysts have raised price targets, citing improved operating cash flow and increased polysilicon prices. These factors are expected to support stronger profit estimates.
• There is growing confidence that company initiatives and external policy shifts could enable Daqo to reach cash cost breakeven in the upcoming quarters.
• Forward guidance is seen as pointing to a potential rebound, with the back half of the year projected for "explosive earnings growth" as conditions stabilize and industry dynamics improve.
• Reduced capital expenditures and disciplined production volumes in a challenging environment position the company to benefit from future margin expansion as pricing recovers.

Bearish Takeaways

• Bearish analysts note recent earnings misses and a slight reduction in 2025 production guidance. These are viewed as signs of ongoing margin pressure and limited near-term upside.
• Ongoing uncertainty in the broader polysilicon market, including challenges stemming from policy shifts and persistent oversupply, continue to weigh on valuations.
• Some remain cautious and prefer to stay on the sidelines until clearer evidence emerges of sustainable industry-wide margin recovery and improved execution.
• Concerns linger that positive catalysts are still reliant on unpredictable external developments, such as the pace and effectiveness of market interventions by authorities.

What's in the News

• Daqo New Energy Corp. reported unaudited third quarter 2025 polysilicon production of 30,650 MT, an increase from 26,012 MT in the second quarter (Announcement of Operating Results).
• The company provided fourth quarter 2025 guidance for polysilicon production of 39,500 MT to 42,500 MT, with full year 2025 expectations of 121,000 MT to 124,000 MT (Corporate Guidance).
• An updated buyback plan has been authorized, allowing Daqo to repurchase up to $100 million of shares or American depositary shares. The plan is funded from existing cash and is valid through December 31, 2026 (Buyback Transaction Announcements).

Valuation Changes

• Consensus Analyst Price Target has risen from $28.53 to $30.81, reflecting a moderate upward revision in expected fair value.
• Discount Rate increased slightly from 11.01% to 11.50%, suggesting a modest adjustment in risk assumptions.
• Revenue Growth forecast improved from 38.4% to 42.1%, signaling stronger expected top-line momentum.
• Net Profit Margin decreased modestly from 7.55% to 7.42%, indicating a slight decline in projected profitability.
• Future P/E multiple jumped significantly from 3.05x to 22.30x, resulting in a markedly higher valuation relative to future earnings.