Freedom Broker puts out trade idea on micro cap Coda Octopus to add 18% in two months
Coda Octopus is a niche marine technology and defense firm / Photo: Facebook/Coda Octopus
Coda Octopus Group, a micro-cap developer of sonar solutions for subsea intelligence and diving, has upside of around 18% in the next two months, Freedom Broker outlined in a recently released short-term trade idea. In June, the company said the U.S. Navy had approved its new system for military divers. The approval opens the door to government procurement, Freedom Broker notes.
Details
Coda could rise to $12 per share over the next two months, argues Freedom Broker (the note has been seen by Oninvest). On Wednesday, the stock closed at $10.20 per share, meaning Freedom Broker’s target price implies around 18% upside.
Coda’s potential is attributable to the U.S. Navy’s approval of its new Diver Augmented Vision Display system (DAVD). The system enables shared visualization between divers underwater and personnel topside and is intended for use in both defense and commercial markets. DAVD also enables operations in zero-visibility conditions, addressing a longstanding challenge in the diving industry, the company said.
The Navy approval opens Coda up to government procurement opportunities: the company expects procurement activity to be skewed toward the second half of fiscal 2026, ending October 31. Investors want to see signs that the business is returning to growth, and its third-quarter earnings report, scheduled for September 14, could provide such evidence, Freedom Broker added.
Expectations for 3Q earnings
Freedom Broker expects the focus to be a recovery in the Marine Technology segment. It is Coda’s largest business and mainly sells sonar systems used to survey the seafloor, as well as motion sensors for vessels. In the fiscal second quarter, the segment’s revenue fell around 27% year over year to $2.8 million, largely because of the conflict in the Middle East. Headline revenue declined 1.6% to $6.9 million. On June 15, when Coda released its quarterly results, the stock plunged around 15%. In the coming third-quarter earnings, investors will also be watching the progress of DAVD and the development of NANO Gen, Coda’s newest line of ultra-compact sonar systems, Freedom Broker writes.
Besides Freedom Broker, only one other house, Alliance Global Partners, covers the company. Both have “buy” ratings on Coda at an average target price of $14 per share, implying 37% upside from the last close.
