GLJ Research downgraded Daqo New Energy (NYSE: DQ) from Buy to Sell on Tuesday, assigning a new price target of $18.13 per share. The research note states the revised target implies roughly a 26% downside from Monday's closing price.
The move comes as the shares have already slipped in recent trading, falling 10.14% over the past week. InvestingPro data cited alongside the research note shows Daqo trading at a Price/Book ratio of 0.38.
GLJ Research analyst Gordon Johnson pointed to growing concerns about China’s polysilicon supply and demand dynamics as a central reason for the rating change. The note highlighted that China’s stated policy to trim excess polysilicon capacity - described by GLJ as an ‘anti-involution’ strategy - has shown uneven execution despite official rhetoric.
The research firm also said polysilicon forward prices appear to reflect the market impact of what it characterized as Beijing’s retreat from that anti-involution campaign, citing regulatory activity observed in January as the basis for that view.
Company-level metrics referenced in the note and related data underscore the headwinds. InvestingPro information indicates Daqo faces a projected revenue decline of approximately 30% in the current year, with gross profit margins already reported at negative 34.2%.
Despite the downgrade, InvestingPro analysis cited in the material suggests that Daqo may be undervalued according to its Fair Value model. The platform also offers additional ProTips for subscribers analyzing Daqo’s financials, noting 12 further tips are available.
In separate corporate disclosures, Daqo New Energy said its unit Xinjiang Daqo New Energy expects to narrow its net loss in fiscal 2025. Xinjiang Daqo forecasts net losses between RMB1.0 billion and RMB1.3 billion for fiscal 2025, an improvement from the RMB2.7 billion net loss reported for fiscal 2024. That projection was published as a preliminary estimate to the Shanghai Stock Exchange.
Daqo New Energy holds roughly 72.8% of Xinjiang Daqo’s equity, according to the information provided in the announcement.
The combination of the analyst downgrade, weak near-term operating metrics, and policy-related uncertainty in China’s polysilicon market forms the current backdrop for investor reassessment of Daqo’s outlook and valuation.