Wooden pellet producer Enviva’ s environmental characteristics are getting misunderstood – and which is unfairly harming its share benefit, Raymond James said. Analyst Pavel Molchanov upgraded the stock to strong obtain from outperform whilst maintaining its rate target at $80, a 52.9% upside in excess of last close. But he claimed the update has practically nothing to do with any improvements in the company’s fiscal outlook and instead is due to what he sees as a deep misunderstanding of the company’s item. The corporation will make wood pellets that can be burned for electrical power as a substitute of coal. “For the first time in our 16 yrs of creating about sustainability, we are upgrading a inventory … as a direct end result of the marketplace misunderstanding the ESG characteristics of the business. Absolutely nothing in this ESG-themed improve is directly relevant to our financial estimates,” he claimed in a note to purchasers. “These days we are producing an affirmative situation for a thing that, to be candid, we never believed would develop into a place of rivalry: bioenergy is an environmentally and socially useful substitution for coal in electrical power technology.” The inventory has been hurt by misconceptions, he claimed. That has produced the entry position even much more attractive as it stands to gain price with the value of wood pellets getting progressively understood. For instance, he made it crystal clear that harvesting timber for use in wood pellets that can then be turned into renewable vitality does not constitute deforestation. He reported it is important to take note that deforestation would mean trees harvested are not replanted, whilst Enviva does not run any timber crops and only uses suppliers who commit to replanting. He also clarified wooden pellets are cleaner-burning than coal, hence producing their use far better for air quality compared to coal. Although he did take note that it is unclear how the carbon dioxide lifespan compares, he mentioned knowledge clearly exhibits that human life are saved when fewer coal is utilised for vitality by means of the reduction of “smog,” a expression used to explain fog that comes from smoke. Molchanov pointed to wood pellets’ position in Europe’s clean electricity transition, when contacting Enviva “the world’s biggest player in this room.” The inventory is up 3.5% before the bell, but is buying and selling down 25.7% this year. — CNBC’s Michael Bloom contributed to this report.