Goldman Sachs downgraded Daqo New Energy from Neutral to Sell on Tuesday, citing persistent cost pressures and execution risks in the company’s pricing strategy.
The bank lowered its price target on Daqo’s American Depositary Shares to $10 from $11.20, implying a potential 26% downside from the stock’s last close of $14.43. The shares have fallen more than 42% over the past six months.
Analyst Mengwen Wang highlighted Daqo’s elevated production costs, estimated at 50 yuan per kilogram, compared with 38 yuan at rival GCL and 42 yuan at Tongwei. The company reported a negative 35% gross margin over the past 12 months.
Goldman Sachs also reduced its shipment volume forecast for 2026 by 40%, reflecting weaker-than-expected demand and pricing dynamics in the polysilicon market. The bank raised its polysilicon price estimate for 2026 by 12% but expects prices to decline by 18% between 2027 and 2030.
Daqo’s second-quarter results missed Wall Street expectations, with adjusted losses of $1.20 per ADS versus a forecast loss of $0.53. Revenue totaled $62.7 million, well below the $114.7 million estimate.
Goldman Sachs noted that Daqo’s valuation already assumes a significant rebound in polysilicon prices, leaving little room for further upside. The bank also flagged early-stage investments in AI-driven data center infrastructure, which are not expected to generate revenue before 2030 but may increase R&D and sales expenses.
The downgrade follows a challenging period for the solar sector, with persistent oversupply and price competition weighing on margins across the industry.
