Codan Ltd (ASX: CDA) shares have delivered incredible returns for investors over the past 12 months.
During this time, the technology company's shares have risen approximately 170%.
That would have turned a $10,000 investment into $27,000.
Is it too late to invest? Let's see what Bell Potter is saying about the company and its shares.
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What is the broker saying?
Bell Potter was impressed with Codan's trading update this week, noting that its guidance was comfortably ahead of consensus expectations. It said:
CDA has provided a FY26 trading update which came in well ahead of both BPe and consensus. FY26 guidance exceeds expectations: The company provided FY26 group EBIT guidance of ~[$235m], 10-11% ahead of BPe and VA consensus expectations and represents 76% YoY growth. CDA also guided to NPAT of ~[$170m], a +11% beat vs. VA consensus.
The broker was particularly pleased with the performance of Codan's Communications segment, which is experiencing strong demand from defence customers. It adds:
Expected to hit the top end of the 15% to 20% growth range for FY26. DTC (unmanned segment) is seeing strong demand from defence customers for software-defined radios and unmanned systems. Zetron 2H26 revenue is tracking broadly in line with 1H26. Communications margins are expected to reach the 30% segment profit margin target in FY26, beating the original FY27 timeline. This is a step up from the 26% margin in FY25 and 1H26. The faster than expected margin expansion is driven by operating leverage with strong revenue growth being delivered, particularly in DTC.
This has led to the broker boosting its earnings forecasts through to FY 2028. It explains:
EPS changes are +11%/+8%/+5% over FY26/27/28e reflecting upgraded revenue in Communications and Minelab as well as expanded Communications margins across the forecast period.
Is it too late to buy Codan shares?
Bell Potter thinks that Codan's shares are fairly valued following their significant rise.
According to the note, the broker has retained its hold rating with an improved price target of $41.30 (from $37.70). This is slightly below its current share price of $42.00.
Commenting on its recommendation, Bell Potter concludes:
We retain our Hold recommendation and increase TP to $41.30 in line with higher earnings. With relatively high levels of R&D spend strengthening CDA's competitive advantages across its businesses, CDA is well positioned to benefit from increased demand for mission-critical connectivity solutions in both defence and public safety markets. We believe CDA shares trade at fair value on 33x FY26 EV / EBIT amidst improving operating momentum and improving outlook in both segments.
