The Novonix Ltd (ASX: NVX) share price has started the week deep in the red.
In afternoon trade, the battery technology company's shares are down 8% to $2.26.
This means the Novonix share price is now down almost 80% since the start of the year.
Why is the Novonix share price sinking?
Investors have been selling down the company's shares on Monday in response to a cautious broker note out of Morgans.
For several months the broker has had a hold rating and $4.88 price target on the Novonix's shares. While only a hold rating, this price target no doubt sparked hopes that there was significant upside ahead for its shares over the next 12 months.
However, those hopes have been extinguished today after Morgans took an axe to its price target.
According to the note, the broker has retained its hold rating but cut its price target by 39% to $2.88.
What did Morgans say?
Morgans notes that the risk off sentiment is now reflected in the Novonix share price but it is still feeling "gun shy."
It explained:
We have deferred our expectations for revenue as commissioning continues on the Riverside anode facility. NVX has not provided further updates on the progress of a firm offtake with Samsung and we suspect it will take longer than hoped.
The market is pricing in risk much more aggressively and NVX has not yet proven the viability of its anode business with blue chip clients at scale.
We have therefore reduced our target price to $2.98 (-39%) with a higher assumed cost of equity and a later assumed ramp up of production.
All in all, it appears as though the broker doesn't feel the risk reward on offer with Novonix's shares is compelling enough at this point despite its sizeable decline in 2022.
