About all the bad news that one single stock could see happened to Enviva (NYSE:EVA) today. As a result, shares are down over 64% at the time of writing. What in the world could possibly hit a company that makes industrial wood pellets this hard? First, Enviva reported its first-quarter results. Its revenues weren’t bad, up 15.5% against this time last year, reaching $269.1 million. However, this wasn’t enough to keep the company from posting a loss of $116.9 million.
That loss, in turn, triggered the next big problem: Enviva canceled its dividend. It wasn’t just the loss that canceled the dividend, of course; Enviva’s management noted that it was a move to “preserve liquidity” as well as “potentially accelerate future investments.” As a sop to investors, it also suggested a “limited share repurchase program” was in the making.
That, in turn, led to the next major problem for Enviva: a slashed outlook. More like “gutted,” really; where previously, Enviva looked for a net loss of between $18 million and $48 million, it now looks for a loss between $136 million and $186 million. That was enough for Truist analyst Jordan Levy to double-downgrade Enviva stock, cutting it from Buy to Sell and citing “…longer-term ability to drive growth/returns” as the biggest reason.
With Levy’s shift, analysts are now clearly skeptical of Enviva. With two Buys, three Holds, and one Sell rating, Enviva stock is now classified as a Hold. But with an average price target of $34.50, Enviva stock offers investors 334.49% upside potential. That is, of course, if price targets don’t change, which they likely will after today’s news.