Codan Ltd (ASX: CDA) shares have been among the best performers on the ASX 200 index over the past 12 months.
During this time, the metal detector and communications products company's shares are up almost 140%.
Is it too late to invest? Let's see what analysts at Bell Potter are saying about this high-flying share.
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What is the broker saying about this ASX 200 share?
Bell Potter highlights that Codan released a trading update which outlines its expectations for the first half of FY 2026.
Pleasingly, the ASX 200 share is expecting to report sales and profits comfortably ahead of the broker's expectations. It said:
In 1H26e, CDA expects to report revenue of $394m, up 29% YoY (+4.8% beat on VA consensus of $376m) comprising: Metal Detection revenue of $168m up 46% YoY (+18.9% beat on VA); and Communication revenue of $222m up 19% YoY (-3.9% miss) consistent with company's target growth range of 15-20%. CDA expects 1H26e underlying NPAT of "not less than $70m", up >52% YoY (+13% beat on VA consensus of $62m), implying NPAT margin of 17.8% (15.1% 1H25a).
The strong revenue and NPAT print appears driven by growth in gold detector sales in the African region, and metal detector sales in other key rest of world recreational markets. Growth in Communications revenue included a full 6 months of the Kagwerks acquisition (vs. 1 month in 1H25a).
Should you buy Codan shares?
While Bell Potter has updated its earnings forecasts for the coming years and boosted its valuation, it feels that the ASX 200 share is fairly valued after its strong run.
According to the note, the broker has retained its hold rating with an improved price target of $36.70 (from $27.80). This is largely in line with its current share price of $37.00.
Commenting on its hold recommendation, the broker said:
We have increased our EV/EBIT multiple in our blended DCF / relative valuation methodology to 40.0x to reflect improving defence sector sentiment and improving Metal Detection outlook. Our updated PT is $36.70. We retain our HOLD recommendation.
We believe CDA shares trade at fair value on 33x EV / EBIT (59% above its 2-year average) amidst improving operating momentum and improving outlook in both segments. Given the seasonality evident in the Metal Detection business we see potential for a FY26e Metal Detection revenue upgrade if positive commentary is given at the 1H26e result.
