Codan Ltd (ASX: CDA) shares were one of the standouts in 2025. And the tech company hasn't disappointed so far this year, surging 27%.
Codan shares opened the trading week with a gain of 4.4% to $36.10.
That move caps a stunning run. Codan shares are now up 121% over the past 12 months, cementing their place among the ASX's top-performing tech stocks.
So, what's powering the rally — and is there still upside left?
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Tech, just not the usual kind
Codan isn't your standard ASX tech darling. Based in Adelaide, it runs a dual-engine business spanning communications and metal detection. It's a rare combo that gives it leverage to both defence budgets and goldfields.
Right now, that mix is paying off.
The communications arm has become the real growth engine for Codan shares. It designs mission-critical communications systems, drones, and defence and public-safety equipment. As global defence spending ramps up, Codan is steadily reducing its reliance on the boom-and-bust cycles of gold prospecting.
That said, Minelab still matters — a lot. Acquired nearly 20 years ago, the brand remains a global leader in metal detection, with products used by everyone from weekend gold hunters to humanitarian demining teams and security agencies.
Gold, growth, and a dream run
Codan shares were on fire in 2025, and they've been keeping the rally alive in the first weeks of the new year. In January, the $6.3 billion tech stock surged to fresh all-time highs. This came after the company delivered a standout first-half FY26 trading update.
The company expects group revenue of approximately $394 million for the half. This represents a growth of around 29% compared to the prior corresponding period. Underlying net profit after tax (NPAT) is expected to be at least $70 million, up roughly 52% year on year.
The next test Codan faces will be when it reports the first-half results on 19 February. Any further gains will likely depend on Codan delivering solid margins and cash flow.
Valuation reality check
Now, valuation looks like the pressure point. After such a blistering run, some analysts are increasingly warning that a lot of the good news may already be priced in.
Broker sentiment has cooled noticeably. Most now see Codan shares trading closer to fair value, with consensus recommendations sitting around neutral.
The average 12-month price target of $39.01 implies 8% upside from current levels.
Bell Potter lifted its earnings forecasts and valuation after the Codan trading update in mid-January. However, the broker believes the ASX share is now fairly priced after its strong rally.
It has reiterated its hold rating and raised its price target to $36.70, up from $27.80. This is broadly in line with the current share price of around $36.10.
