On Tuesday, Roth/MKM adjusted its outlook on Daqo New Energy (NYSE:), reducing the price target from the previous $23.00 to $15.00 while keeping a Neutral rating on the stock. The adjustment follows Daqo New Energy’s reported second-quarter earnings miss and a downward revision of its 2024 guidance.

The company has scaled back its target production utilization rate, which has repercussions on its financial projections. Current polysilicon prices are reported to be below the cash costs, which could mean that the company might not see prices return to breakeven levels until the middle of 2025.

Roth/MKM has identified potential industry consolidation and the possibility of capacity permanently leaving the market within the next twelve months. Despite these challenges, Daqo New Energy is recognized for its considerable liquidity position, with $2.5 billion on hand, which could be a critical factor in weathering the current market conditions.

The firm anticipates that Daqo New Energy will prioritize cash conservation strategies as it maneuvers through the uncertain environment.

This perspective has led to a revision of estimates to align with the more difficult outlook for the company, while the Neutral rating remains unchanged.

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