Why is the Novonix share price surging 16% higher today?

Novonix shares are surging again…

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The Novonix Ltd (ASX: NVX) share price is having another strong day.

On Monday morning, the battery materials and technology company's shares are up 16% to $2.56.

This means the Novonix share price is now up 31% since this time last week.

Why is the Novonix share price on fire right now?

Investors have been scrambling to buy Novonix's shares in recent sessions thanks to the release of a major announcement last week.

That announcement revealed that its Anode Materials division has been selected to enter negotiations to receive US$150 million (A$240 million) in grant funding from the US Department of Energy. Under the terms of the grant, the government funds must be at least matched by the recipient.

This is part of a major government funding package which aims to strengthen the North American battery supply chain amid surging demand and growing calls to onshore these critical industries.

Management notes that these funds would be dedicated to the construction of a 30,000 tonnes per annum (tpa) US manufacturing facility, including site selection, plant layout, and engineering design with capability for additional expansion.

What else?

Also giving the Novonix share price a lift has been news that a leading broker has become bullish.

According to a note out of Morgans, its analysts have upgraded the company's shares to a speculative buy rating and lifted their price target by $1.00 to $3.11.

Even after its strong recent gains, this implies potential upside of over 21% for investors over the next 12 months.

The broker made the move in response to the US government grant. And while its analysts acknowledge that Novonix's project costs are greater than it expected, they are overlooking this due to the positive long term outlook for anode prices.

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.

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