Codan shares (ASX: CDA) fell 6.04% to A$63.28 today, giving back a small slice of the best run on the ASX 200 this year. The CDA share price remains 118% higher YTD as the top performer on the index, yet with the Info Tech sector down big on the day, the leading tech stock was not immune to a pullback.
The move appears to reflect some profit-taking in a more risk off market, certainly as far as growth tech is concerned, with the XIJ down 4.37%.
The fundamental case remains strong on paper. Codan’s FY2026 result showed revenue up around 30% and net profit up roughly 69%, with communications revenue climbing about 22% and Minelab surging around 42% at very high margins. The business splits between higher-margin communications platforms, through DTC and Zetron systems sold to governments and emergency services, generating about A$506 million, and metal detection contributing roughly A$362 million.
The Setup
Looking to analyst for clues, the average price target at A$66.77 suggests a marginal upside remains from here. Analysts broadly see the growth story as intact, but after a double up this year, the easy money has clearly been made.
On the technical side, the pullback is occurring within a firmly established uptrend, allowing the RSI to cool to 62. The share price remains well above its 50-day average of A$50.42 and its 200-day average of A$40.97, with the 50-day above the 200-day. Trend-strength readings are elevated and rising, confirming a strong, mature trend rather than a fragile one.
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For now, the tape is wobbling a little, but the trend remains in tact. Zooming out for a little context, and Codan remains the best performer on the ASX 200 this year, with a close to 10% drawdown from highs within normal consolidation zones. A cooling of the RSI could even be healthy for the longer term trend, yet bulls will want to see buyers step in before the technical bear market.
Bull Case:
- FY2026 revenue up about 30% and net profit up roughly 69%, Minelab surging 42%.
- Defense and public-safety spending expanding the communications order book through DTC and Zetron.
- Consensus target near A$66.77 implies modest upside, with brokers flagging potential earnings upgrades.
Bear Case:
- RSI above 75 signals stretched momentum after a roughly 130% run since early 2026.
- Forward P/E near 41 times leaves little room if gold or defense assumptions disappoint.
- Minelab margins rely on elevated gold prices; a deeper pullback could normalise demand.
