The Codan Limited (ASX:CDA) share price is jumping higher on Tuesday and has just hit a record high. Here’s why it is on fire today…
The post Why the Codan (ASX:CDA) share price is jumping 7% to a record high appeared first on The Motley Fool Australia. –
The Codan Limited (ASX: CDA) share price has started the week in sensational form.
In afternoon trade, the technology company’s shares are up 7.5% to a record high of $17.06.
This latest gain means the Codan share price is now up over 51% since the start of the year.
Why is the Codan share price at a record high?
Investors have been fighting to get hold of the company’s shares this year for a number of reasons.
This includes its strong performance in the first half of FY 2021, its inclusion in the S&P/ASX 200 Index (ASX: XJO), the announcement of two key acquisitions, and bullish brokers.
In respect to acquisitions, in February Codan announced a deal to acquire Domo Tactical Communications for US$88 million.
Domo Tactical Communications’ MIMO Mesh products provide wireless transmission of video and other data applications to predominantly first world customers. This includes Military and Special Forces, Intelligence Agencies, Border Control, First Responders, and Broadcasters.
Codan followed this up with the acquisition of Zetron, Inc. for US$45 million last week.
Zetron is a leading US based company providing mission critical communications and interoperability solutions for public safety, transportation, utilities, healthcare and natural resources customers.
Management is forecasting both acquisitions to be accretive to earnings per share.
Why is it jumping today?
Today’s rise in the Codan share price is being driven by one of the aforementioned bullish brokers.
As I mentioned here earlier today, this morning Macquarie Group Ltd (ASX: MQG) spoke positively about the company. Its analysts have retained their outperform rating and lifted their price target on the company’s shares to $17.00.
Macquarie is happy with the acquisition of Zetron and feels it gives Codan exposure to a complementary and attractive market.
In addition to this, the broker notes that Codan has recently launched a key new gold detector. Based on previous launches, which have led to a strong upgrade cycle, Macquarie appears to believe this could give its sales a big boost.
However, with the Codan share price now surpassing Macquarie’s price target, the upside from here could be limited in the near term.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.