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On Thursday, Goldman Sachs initiated coverage on Codan Limited (CDA:AU) (OTC: CODAF), a manufacturer and supplier of electronic solutions, with a Buy rating and a price target of AUD18.00. The firm's positive stance on Codan is based on several growth prospects for the company's Metal Detection and Communication segments.
Codan, known for its metal detection and communications equipment, including high-frequency and land mobile radio systems used by military and emergency response teams, is poised for growth, according to Goldman Sachs. The analyst pointed out that Zetron, a Codan company, stands to benefit from US government funding earmarked for Next (LON:NXT) Generation 911 (NG911) systems, which is expected to be between US$10-15 billion. The annual state expenditure on these systems is anticipated to increase.
The Tactical Communications division is expected to thrive due to favorable military spending and general industry tailwinds. Additionally, the Metal Detection segment is likely to expand its market share, supported by the addition of new distribution points and ongoing product development.
Goldman Sachs also noted Codan's strategy of pursuing accretive bolt-on acquisitions, which could enhance its product portfolio, customer base, and geographical reach in the Communications sector. This strategic approach is aimed at fostering continued growth and expansion for Codan.
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