JPMorgan Reiterates Overweight Rating on Daqo New Energy (DQ)

JPMorgan analyst Alan Hon reiterated an Overweight rating and $23.00 price target on Daqo New Energy (NYSE: DQ).

The analyst comments "In contrast with lackluster share price performance YTD (down 34%, vs. MXCN +9%) as the poly cycle is worse than expected, holdings of the top 15 institutional investors were up from ~30% at end-FY23 to nearly 50% by end-2Q24. Some investors may argue that our valuation call was too early, but at the current juncture, the poly industry cycle cannot worsen (already at industry-wide cash losses). Forecasting the inflection point can be tricky. It could arrive soon if some cost laggards exit now or, at worst, linger for multiple quarters before some firms run out of cash. Daqo has net cash of US$2.4bn (the highest in the industry) and is a cost leader, so it is set to ride out the storm, in our view. Currently trading on a 0.2x P/BV (vs. the historical mid-cycle multiple of 0.8x, excluding the super cycle in 2021/22), we believe Daqo’s share price has the potential to double or triple in three years’ time. With its operating company trading at 5.3x the market cap of Daqo, we would not rule out privatization potential. Maintain OW."

For an analyst ratings summary and ratings history on Daqo New Energy click here. For more ratings news on Daqo New Energy click here.

Shares of Daqo New Energy closed at $17.57 yesterday.

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