Analyst: buy this bioenergy stock for a 50% return

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Enviva Inc (NYSE: EVA) ended 7.0% up on Tuesday after a Raymond James analyst turned super bullish on the renewable energy company.

Enviva stock has upside to $80 a share

Pavel Molchanov, in a note this morning, said the stock was a “strong buy” with upside to $80 – representing a possibility that shares could climb another 50% from here.

Enviva stock sold off sharply after a short report from Blue Orca Capital last week. That sell-off, he argued, created an even better opportunity to buy shares of this bioenergy company at a deep discount.

We’re upgrading Enviva Inc as a direct result of the market misunderstanding the ESG attributes of the business. With the healthy and growing dividend, we think the stock’s recent dislocation provides a compelling entry point.

Enviva pays a dividend yield of about 6.5%.

Enviva to report quarterly results next month

Enviva is scheduled to report its Q3 results in the first week of November. Consensus is for it to earn 9 cents a share this quarter versus 63 cents a year ago.

The aforementioned short report has the Enviva stock now trading down about 40% for the year. Still, Molchanov wrote:

It’s a textbook example of sentiment-based multiple compression. We’re making an affirmative case for something we never thought would become a point of contention: bioenergy is environmentally beneficial replacement for coal in power generation.

Its use is not “tantamount” to deforestation either, he added. The stock market news arrives only weeks after Enviva said Hurricane Ian did not meaningfully disrupt its operations and updated its guidance for the full year.

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