Zacks Small Cap Research Report July 2025

Positive outlook from report published by Zacks Small Cap Research on 25 July 2025. Price target on NASDAQ of USD $4.00 per share which translates on ASX to approximately AUD $1.50 per share.

Link -NVX: Believe Positive Outlook Supported by Provisional Imposition of Anti-Dumping Tariffs on Material Imported From China

Valuation
As Novonix moves closer to commercializing its North American materials businesses, we expect the shares to begin to reflect the value of the anode and cathode initiatives. We believe expected milestones – such as fulfilling the off-take agreements – could act as catalysts for multiple expansion and share price appreciation. Given anticipated battery demand and depending on market conditions, we believe it is not unreasonable to expect that the company could deliver annual revenue in the US$15 million to US$20 million range in the next few years, the combination of the legacy BTS business and new materials and testing revenue.

Share price multiples in the clean tech space average about 3x revenue and multiples for renewable energy players are significantly higher. While there are no true direct comparisons for Novonix, in our view, these sectors can provide a benchmark. If NVX can reach the above noted revenue in the 2026-27 timeframe, discounting back at 11% per annum implies near-term imputed revenue of about US$8.5 million. To that we apply a 2.5x multiple, below the blended sector multiples noted above to reflect higher risk at this early stage in NVX’s development, and a confidence metric of roughly 25% to account for potential delays in delivering this topline. This implies a near-term valuation of about $4. If the company achieves certain milestones faster than we expect, it could cause us to change our confidence metric.

We believe the risk / reward ratio could be attractive for investors who have a higher than average risk tolerance and longer time horizon. We think the current share price level does not reflect the fundamental value of the company’s prospects and expect them to begin to reflect future prospects, as the company continues to advance its strategy. In success, we would anticipate multiple and share price expansion. Any delay or failure in successful execution of the strategy could cause the share price to decline and represent a potential risk to our valuation.