Novonix (ASX:NVX) share price falls on broker downgrade

The Novonix share price is out of form on Monday…

| More on:
A green fully charged battery symbol surrounded by green charge lights representing the surging Vulcan share price today

Image source: Getty Images

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.

Should you invest $1,000 in Novonix right now?

Before you consider Novonix, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Novonix wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

a businessman in a suit tries to forge ahead but is carrying a rope attached to a large anchor that is stuck in the ground against a background of muted sky and barren earth.
Broker Notes

What’s dragging on the Wesfarmers share price on Monday?

We check what one leading broker has to say about the retail giant's prospects.

Read more »

Two medical researchers in white coats collaborate over a computer screen of data in a medical research laboratory
Broker Notes

Where next for the CSL share price?

CSL shares could be heading higher according to one leading broker...

Read more »

Woman on her laptop thinking to herself.
Broker Notes

2 ASX All Ordinaries shares top brokers rate as buys

Here are the latest buy-rated shares from two leading brokers.

Read more »

A woman sits at her computer with hand to mouth and a contemplative smile on her face although she is considering or thinking about information she is seeing on the screen.
Broker Notes

Brokers: 2 ASX 200 shares that could be top buys for growth

Brokers think these ASX 200 shares with growth potential could be leading opportunities.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers rate these ASX shares as buys...

Read more »

outperforming asx share price represented by row of white eggs with cartoon sad faces with one gold egg with happy face and crown
Broker Notes

This is the best ASX bank share to buy in a rising rate environment: Citi

Only one major bank is sticking to its cost-savings goals, according to the broker.

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Broker Notes

Is the Fortescue share price cheap after dropping 10% in a month?

We check what brokers have to say on the iron ore giant.

Read more »

A business man in soft-focus holds two fingers in the air in the foreground of the shot as he stands smiling in the background against a clear sky.
Broker Notes

Buy these 2 ASX shares on sale right now: top broker

A top broker has revealed two ASX shares which have fallen heavily but look like good buys.

Read more »