Enviva ( NYSE: EVA ) -2.4% in Friday's trading, giving up initial gains that followed an upgrade by Citi analysts to Buy from Neutral with a $62 price target, after the stock plunged 13% on Wednesday in reaction to a short call from Blue Orca Capital .
Blue Orca ripped Enviva's ( EVA ) claims to be a pure-play ESG company as "nonsense on all counts," but Citi's Ryan Levine said his team took "a closer look at the bearish arguments, and believe the stock overreacted to the negative."
Levine said during meetings with Enviva ( EVA ) management over the years, "they have consistently pointed out that most but not all of its fiber supply was from trees that would have already fallen down. This concern around how GHG-friendly is biomass isn't a new concern [and] has been litigated several times over the last decade, and each time Enviva's business model has remained intact."
The analyst noted Enviva's ( EVA ) conversion from an MLP to a C-Corp, "and we believe drop down multiple stock arguments don't have any implications on the business today."
Enviva ( EVA ) "faces two critical upcoming tests" - centering around its cash conversion rate during H2 2022, and its ability to continue accessing external capital from debt markets as its bond prices sell off similar to the panic of 2020 - Daniel Thurecht writes in an analysis published on Seeking Alpha .
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Enviva upgraded to Buy at Citi after big drop from short report