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.
