editorial-team@simplywallst.com (Simply Wall St)
3 min read
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The latest analyst coverage could presage a bad day for Daqo New Energy Corp. (NYSE:DQ), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Daqo New Energy recently, with the stock price up an impressive 15% to US$14.98 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
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Following the latest downgrade, the nine analysts covering Daqo New Energy provided consensus estimates of US$704m revenue in 2025, which would reflect a small 4.5% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 39% to US$3.91. Yet before this consensus update, the analysts had been forecasting revenues of US$796m and losses of US$3.62 per share in 2025. Ergo, there’s been a clear change in sentiment, with the analysts administering a notable cut to this year’s revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for Daqo New Energy
The consensus price target was broadly unchanged at US$21.53, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 6.0% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Daqo New Energy is expected to lag the wider industry.
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Daqo New Energy’s revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year’s forecasts, we’d be feeling a little more wary of Daqo New Energy going forwards.
