Novonix share price sinks 8% following 'gun shy' broker note

Novonix shares are taking another beating on Monday…

| More on:
a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the Pilbara Minerals share price continue to fall

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Novonix shares have taken a tumble on Monday
  • The battery technology company's shares are now down almost 80% in 2022
  • A cautious broker note out of Morgans appears to be the catalyst for today's decline

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.

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 Scott Phillips.

More on Materials Shares

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Materials Shares

ASX mining in April 2024: The best stock to buy right now

Analysts at Bell Potter think this mining stock could offer big returns.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

The Core Lithium share is down 27% in March: What's next?

Times have been hard for this lithium miner's shareholders. Will things improve?

Read more »

A female worker in a hard hat smiles in an oil field.
Materials Shares

Why it's a great day to own BHP shares

The Big Australian's shareholders have reason to smile on Thursday.

Read more »

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Materials Shares

Why did this ASX All Ords stock just crash 36%?

Investors have been hitting the sell button on Tuesday.

Read more »

A miner in a hardhat makes a sale on his tablet in the field.
Materials Shares

Lake Resources share price surges on sustainable lithium news

Lake Resources shares are enjoying a welcome lift today.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Materials Shares

Mineral Resources shares fall despite 'exceptional results'

This mining and mining services company has provided an update on its energy business.

Read more »

A man looking at his laptop and thinking.
Materials Shares

Are Pilbara Minerals shares in the buy zone or overvalued?

Here's what Bell Potter is saying about the lithium giant.

Read more »

Three guys in shirts and ties give the thumbs down.
Materials Shares

3 reasons to sell Core Lithium shares

This lithium miner's decline may not be over according to Goldman Sachs.

Read more »