The Novonix Ltd (ASX: NVX) share price has run out of steam on Monday.
In afternoon trade, the battery materials company's shares are down 1% to $5.84.
This looks set to end an incredible run which saw the Novonix share price rise 21% over five trading sessions last week.
Why is the Novonix share price sliding today?
There are likely to be a couple of catalysts for the weakness in the Novonix share price on Monday.
The first is profit taking after the strong gain it made last week. That gain was driven by increasingly positive sentiment in the battery materials sector and news that the company's shares will be added to the ASX 300 index at the next rebalance.
What else is weighing on its shares?
Perhaps the biggest weight on the Novonix share price has been a broker note out of Morgans.
On Friday, the broker called time on its rally and downgraded the company's shares to a hold rating with a $5.68 price target.
Morgans notes that the company's shares have risen significantly, not just last week, but also in the weeks prior. It feels this has left its shares fully valued and sees limited upside potential in the near term.
The broker commented: "NVX has rallied 83% over the past month following the announcement of the strategic share placement to Philpps66 in early August. The company has also recently been included in the ASX300 which it has outperformed by 86% over the same time period."
"NVX's prospects continue to look promising however we think the share price already reflects a lot of the future success that we think the company will achieve. There is still a small premium to our updated base case valuation but we think the risk to reward is less attractive than before. We therefore reduce our rating to HOLD as we wait for more detail on the company's progress on the Samsung quality audit and confirmation of our expectations for gross margins," it added.
