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Auriga Reiterates a 'Buy' on Daqo New Energy (DQ); Mr. Toad's Wild Ride

April 14, 2011 8:31 AM EDT
Get Alerts DQ Hot Sheet
Price: $28.15 +5.39%

Rating Summary:
    10 Buy, 6 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Auriga reiterates a 'Buy' on Daqo New Energy (NYSE: DQ), PT $22.

Auriga analyst says, "The price chart for shares of DQ since its IPO reminds us of an amusement park ride. Although going through constant undulations, the ride always seems to arrive safely back at the station (near the IPO price); thus, the thrill of appreciation is short-lived. While the price action largely follows the performance of the solar industry as a whole, we are disappointed that investors do not recognize the stock specific attributes to drive the stock appreciably higher. Specifically, the end market for polysilicon has increased substantially since Q4 2010 and the consensus EPS estimates on DQ have increased roughly 2X since the IPO, yet the stock still trades between 4X and 5X our earnings estimates. Our latest channel checks on the company suggest that the expansion plans remain on-track, while our industry pricing checks suggest there is likely still upside to our near-term estimates as there has been no decrease in spot polysilicon prices. Over the longer term, we remind investors that our 2012 estimates, which drive our price target, are predicated on poly pricing of just $45/kg.

For more ratings news on Daqo New Energy click here and for the rating history of Daqo New Energy click here.

Shares of Daqo New Energy closed at $11.47 yesterday.


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