Daqo (DQ) Stock Jumps 20.1%: Will It Continue to Soar?

Zacks Equity Research
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Daqo New Energy (DQ) shares rallied 20.1% in the last trading session to close at $79.38. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 17% gain over the past four weeks.

DQ’s stock popped on optimism over the initial public offering (IPO) of its major operational subsidiary, Xinjiang Daqo New Energy on the Shanghai Stock Exchange’s Sci-Tech innovation board. Xinjiang Daqo is issuing 300 million shares representing roughly 15.58% of the total shares outstanding after the IPO at a price of RMB 21.49 per share. The IPO is expected to raise gross proceeds of around RMB 6.45 billion. Daqo New Energy will own roughly 80.7% of Xinjiang Daqo following the IPO.

This solar panel parts maker is expected to post quarterly earnings of $3.29 per share in its upcoming report, which represents a year-over-year change of +10866.7%. Revenues are expected to be $462 million, up 246% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Daqo, the consensus EPS estimate for the quarter has been revised 37.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on DQ going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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