Codan Ltd (ASX: CDA) shares have been on fire over the past 12 months.
Following a stunning 24% gain on Tuesday, the technology products company's shares are now up almost 120% since this time last year.
Is it too late to invest? Let's find out what Bell Potter is saying about this high-flying stock.
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What is the broker saying?
Bell Potter notes that Codan released a trading update for the first half of FY 2027, which revealed an acceleration in the strong momentum seen with its results in August.
Commenting on the Communications segment, the broker said:
CDA now expects 1H27 revenue of $400-410m (BPe $289m, VAe $283m) with 50% of revenue expected to come from conflict regions (vs. 20% in pcp. Outside of conflict regions, CDA expects the Communication segment to deliver 1H27 revenue growth in the order of 20% vs. pcp with broad-based growth across regions and markets.
Elevated demand is expected to drive substantial operating leverage, resulting in a 1H27 EBIT margin of 40% (2H26 34.3%). CDA has upgraded full year FY27 Communications revenue growth target range to 30-40% from 20%. BPe and Consensus are both in line with original target growth of 20%. CDA has not given full year EBIT margin guidance.
The good news is the Metal Detection business is performing positively as well thanks to a strong gold price and new product launches. It adds:
Minelab 1H27 revenue run-rate is now slightly above 2H26 levels an improvement from August 20 where it was tracking in line. (BPe monthly run rate of $33m in 1H27 vs. $32m in 2H26). The strong momentum is driven by recently launched GPZ 8000 and Gold Monster 2000 detectors, a favourable gold price and the continued expansion of ROW.
Is it too late to buy Codan shares?
While the big returns may now be behind us, Bell Potter doesn't believe it is too late to buy Codan shares.
This morning, the broker has responded to the update by retaining its buy rating on the company's shares with an improved price target of $73.00 (from $60.00).
Based on its current share price of $64.43, this implies potential upside of 13.3% over the next 12 months.
Commenting on its bullish view of the stock, Bell Potter said:
We forecast 39% Comms revenue growth in FY27e, implying 5% YoY in 2H27, and see scope for further upgrades if CDA successfully mitigates supply chain pressures given surging production of Group 2 UAS. CDA trades on 32x EBIT. Retain Buy.
