RBC Capital downgraded Enviva Inc. (NYSE:EVA) to sector perform from outperform, lowering their price target to $76 from $80.

While the analysts still believe in the longer-term growth potential for the company, they mentioned that the near-term headwinds, specifically around costs, are likely to cap any meaningful share price upside.

According to the analysts, in a normal inflationary environment the company’s cost escalators could more than cover its cost increases. However, in the current inflationary environment with PPI running at approximately 10%, the analysts have less visibility on cost recovery.

The analysts lowered their H2/22 adjusted EBITDA estimates to the low end of the company’s guidance given the potential for elevated costs and shipment delays in Q4. The analysts expect 2022/2023 full-year adjusted EBITDA to be $230 million/$300 million.