The rally of ASX tech share Codan Ltd (ASX: CDA) this year has been spectacular. However, the share price has seen a strong pull-back in the last two weeks.
Codan has lost 15% of its value, after hitting a new all-time high of $36.92 early November. Wednesday was another loss-making day for the ASX tech share, when it closed at $29.44, almost 4% lower than the day before.
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Unique business profile
Codan is an Adelaide based global developer with a dual focus: communications and metal detection. This gives the technology company a unique profile. It's not just a hardware tech player, but also a business with deep roots in both gold-driven markets and defence communications.
The communications division is now the growth engine of Codan. It designs and builds mission-critical communications equipment, drones and defence and public safety comms gear. The shift toward defence communications means Codan is less exposed to the boom-bust cycles of gold prospecting.
Through its Minelab brand, acquired almost 20 years ago, Codan produces metal detectors used for everything from recreational prospecting to humanitarian demining and security.
Gold rally inspired Codan's dream-run
This ASX tech share has had a great run in 2025, up 83% in 2025, including a more than 20% lift in October. Codan delivered strong growth in FY25, with group revenue up 22%, EBIT expanding 28%, and net profit after tax (NPAT) rising 27%.
The communications segment was the standout performer, delivering 26% revenue growth and 34% profit growth. Looking ahead to FY26, management said that positive market conditions had continued into FY25, supporting Codan's growth outlook.
CEO Alf Ianniello commented at last month's AGM:
Elevated defence spending and ongoing geopolitical tensions continue to support demand across Codan's Communications markets, with the business remaining on track to deliver 15 to 20% revenue growth for FY26.
Last month's rally was mainly driven by the roaring gold price, which set a new all-time record above US$4,300 per ounce. Strong gold prices are helping spur demand for Minelab detectors, especially in regions like Africa.
Valuation concerns
The recent pullback looks largely driven by valuation concerns and investors cashing some of their gains. Several analysts seem cautious that much of the gain in Codan's share price is already baked in.
The majority of brokers is cautiously positive, but there's no outright bullishness. Many analysts feel that the ASX tech share is now trading closer to fair value than earlier this month. The average 12-month price target forecasted by brokers is $32, implying a modest 8% upside from the current share price.
