Clear Street Maintains Buy Rating on Arq but Lowers Price Target to $8

Clear Street has reaffirmed its Buy recommendation on Arq, Inc. while reducing the 12-month price target to $8 from $9. The change, disclosed in a late-November investor note, follows production challenges at the company’s new Granular Activated Carbon (GAC) line that are now expected to continue through mid-2026.

The brokerage explained that Arq anticipates technical issues at the GAC facility will delay the ramp to more than 95 percent utilization. Clear Street’s model previously assumed the line would reach that level sooner, enabling the launch of a second line ahead of 2027. With the revised outlook, the firm projects a slower capacity build-out and has trimmed its 2027 revenue forecast accordingly.

Arq, Inc. trades on the Nasdaq under the ticker ARQ and develops activated-carbon-based solutions used to treat air, water, and soil. The company markets its products in the United States and Canada, targeting industrial customers that require consumable filtration and remediation media. Activated carbon is widely recognized as an effective adsorbent; the U.S. Environmental Protection Agency lists the material among standard treatment methods for removing contaminants from water and other substances.

Operational setbacks have put near-term results under pressure. On November 6, Arq reported third-quarter 2025 revenue of $35 million, a modest year-over-year increase but $0.6 million below Wall Street expectations. The company posted a net loss of $0.02 per share, missing consensus estimates by $0.04.

Management has emphasized that the new production line is crucial to scaling volumes and improving profitability. The plant’s lower-than-planned throughput has limited operating leverage and contributed to the earnings shortfall. Clear Street’s analysis assumes that once the line stabilizes, utilization will climb steadily, supporting margin expansion and justifying continued investment in additional capacity.

Arq is often categorized as a micro-cap stock, and several analysts consider it one of the segment’s more promising environmental technology names. Even with the downward price-target revision, Clear Street’s Buy rating signals an expectation that the shares will outperform broader market benchmarks over the coming year.

The latest research note marks the second adjustment to the firm’s valuation model in 2025. Earlier in the year, Clear Street had increased its target to $9 based on expectations that the initial GAC line would reach efficient output before year-end. Ongoing mechanical and process issues, however, prompted the brokerage to extend its timeline for stabilization.

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Under the updated scenario, Clear Street projects that Arq will achieve high-90-percent utilization only after mid-2026. The anticipated installation of a second GAC line, originally slated to begin contributing before 2027, is now delayed. The deferral reduces projected top-line growth for that year but does not alter the brokerage’s view that underlying demand for activated carbon remains intact.

Investors will look for further clarity when Arq releases fourth-quarter 2025 earnings. Any revisions to management’s operational guidance could influence market sentiment and determine whether additional target adjustments are necessary. For the moment, Clear Street’s $8 objective leaves room for upside from recent trading levels, though less than originally forecast.

Analysts monitoring the stock note that resolving the production issues is essential for meeting customer orders and improving financial performance. Achieving steady state at the current facility is also a prerequisite for approving capital spending on future expansion lines.

Crédito da imagem: Insider Monkey