The Novonix (ASX:NVX) share price appears to have come off the boil. Is it a buy?

Is now the time to buy Novonix shares?

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The Novonix Ltd (ASX: NVX) share price is having an uncharacteristically bad week.

In afternoon trade on Thursday, the battery materials company’s shares are down almost 2% to $5.59.

This means the Novonix share price has now pulled back by almost 9% since peaking at $6.12 on Friday.

What’s going on with the Novonix share price?

The Novonix share price came off the boil this week after a leading broker called time on its incredible rally.

And what a rally it has been. When the company’s shares hit $6.12 on Friday, it meant they were up a staggering ~400% since the start of the year.

This has been driven by increasingly bullish sentiment in the battery materials sector, news of a strategic investment by US energy giant Phillips 66, and its inclusion in the ASX 300 index.

However, as positive as this all is, the team at Morgans believe it is all priced into the Novonix share price now.

What did the broker say?

According to the note, the broker has downgraded the company’s shares to a hold rating with an improved price target of $5.68. This is broadly in line with where the Novonix share price trades now.

Morgans explained: “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.”

In light of this, Morgans appears to believe investors should wait for a better entry point before buying shares.

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 nearly 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 August 16th 2021

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.

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