Codan Shares Close At Record High as Rally Stretches RSI

Codan shares (ASX:CDA) continued to find strength despite a punishing session for Aussie shares to kick off Q4, making a new all time high close as the ASX 200 fell 1.99%.

The Codan share price has been on a breakneck rally this year, with Thursday’s 2.52% gain to A$67.49 a new all-time high closing price, yet off the intraday ATH at A$70.14 on Wednesday. The rally has been one of the best on the ASX for 2026, with shares now up 132.56% YTD, and 41.28% over the past month alone.

The sustained momentum has pushed the RSI to an extreme overbought reading of 86.27, a level that signals the rally may be stretched, even as the underlying fundamental narrative continues to attract fresh buying interest.

Driving The Breakout

The most recent fundamental driver for the breakout was a landmark earnings upgrade for the first half of FY27 that reset expectations, and saw analysts move to remodel earnings. The company guided for H1 FY27 Net Profit After Tax (NPAT) of at least A$160 million,a surge of more than 125% compared to the A$71.2 million reported in the prior corresponding period. To put that figure in context, this single half-year result represents approximately 91% of Codan’s entire full-year FY26 net profit.

The Communications segment is doing the heavy lifting. Revenue for the division is projected to reach A$400 million to A$410 million for H1 FY27, up from A$221.8 million in the prior period. Full-year segment revenue growth guidance has been upgraded to a range of 30% to 40%. Margins within the Communications division have expanded toward approximately 40%, driven by operational leverage as manufacturing costs are spread across a materially higher volume of units, arriving roughly 18 months ahead of the company’s own long-term FY27 targets.

The structural driver behind this acceleration is global demand for unmanned systems. Codan supplies high-speed radio-frequency data transmission components to approximately 50 drone manufacturers across the United States and Europe. Demand from active conflict zones, including the Russia-Ukraine theatre and the Middle East, has surged, with management noting that the Communications division’s exposure to conflict-driven orders now accounts for a significant proportion of near-term revenue. NATO’s broader “Drone Edge” initiative and the structural shift among allied militaries toward mass drone deployment have created a multi-year demand runway that Codan appears uniquely positioned to capitalise on.

The company’s second division, Minelab, continues to provide meaningful earnings diversification. Persistently elevated global gold prices have driven strong detector sales among artisanal and small-scale gold prospectors, particularly across African markets. .

What Comes Next?

Momentum has been almost impossible to miss, with Codan’s market cap passing A$12 billion, overtaking WiseTech Global to the title of the largest tech stock on the ASX. From a technical standpoint, the RSI reading of 86.27 sits in territory that has historically preceded periods of consolidation or pullback, even in structurally sound growth stories, although conditions can persist for extended periods.

With there being many more names on the ASX making 52 week lows than highs, momentum followers have fewer stocks to look for during times of stress. This could also be amplifying some of the demand for Codan ignoring technicals. There are no rules that say a rally has to cool off of course, yet historical precedent tells us that it will happen sooner or later for stocks who are the most overbought on the market. It is never wise to try to fight the trend however, with the age old saying ‘the trend is your friend’ proving strong in this one.