DAVA Stock Forecast & Price Target

Endava has experienced sequential revenue growth of 5% in North America, driven by a reclassification of a significant payments client from the UK, which reflects the company's expanding market presence. The company has increased its headcount by 1.4%, emphasizing its investment in AI initiatives, which aligns with growing demand in key industry verticals such as payments and technology. Furthermore, the establishment of a multi-year, $100 million relationship with a payments client showcases Endava's ability to secure substantial contracts, positioning the firm for long-term organic growth and potential upside through strategic mergers and acquisitions.

Endava reported a decline in 1Q FY26 revenue to £178.2 million, marking an 8.6% year-over-year decrease and a 4.6% quarter-over-quarter decline, attributed to unexpected client credit issues and a sluggish pipeline. Consequently, the company has revised its FY26 revenue guidance down to £735 million–£752 million, reflecting ongoing demand softness and increased operational costs, particularly related to AI investments. Additionally, with pressure on both gross and operating margins and the stock trading at approximately five times the FY27 EPS estimate, there appears to be significant downside risk to growth and valuation metrics.