Shares of Daqo New Energy (NYSE: DQ) surged 5.05% during intraday trading on Tuesday, continuing its impressive momentum from recent months. The solar energy company's stock has been gaining attention from investors, with a nearly 30% increase over the past three months despite ongoing volatility in the solar sector.

The latest rally comes as analysts suggest that Daqo New Energy might be undervalued. The consensus narrative puts the company's fair value at $26.58, slightly above its recent closing price of $25.55. This potential undervaluation is further supported by a DCF model analysis, which indicates an even more substantial upside potential.

Recent regulatory interventions by Chinese authorities to curb irrational competition and enforce sales above production costs are expected to benefit companies like Daqo New Energy. These changes could stabilize polysilicon prices and improve industry profitability, potentially boosting Daqo's future revenue and margins. However, investors should remain cautious, as persistent industry oversupply and recurring operating losses could challenge this optimistic outlook if conditions do not improve as anticipated.