DAVA Stock Forecast & Price Target

Endava is well positioned for a rebound because its digital engineering and transformation focus aligns with rising enterprise demand for next-generation software, AI, and GenAI initiatives, especially in attractive verticals like payments, financial services, technology, media, telecom, retail, and CPG. Its outcome-based Dava.Flow model is gaining traction, with £27mm of revenue and 15% of total revenue versus 5% a year ago, alongside 12 client deployments versus 3 last quarter, and management notes these engagements carry materially higher margins than legacy time-and-materials work. Even with near-term pressure from AI-related productivity harvesting and softer revenue, the mix shift toward Dava.Flow and the continued move from 77% to about 71% T&M support margin recovery and a credible path to stronger organic growth.

Endava is facing a weakening fundamentals backdrop, with 3QFY26 revenue of £178.5 million down 6.4% year over year and adjusted PBT margin compressing to 1.8%, while adjusted diluted EPS of £0.05 fell far short of expectations. The outlook worsened as FY26 revenue guidance was cut to £721.8 million-£725.8 million and adjusted EPS guidance to £0.45-£0.49, reflecting slow pipeline conversion, extended deal cycles, and subdued demand in banking, capital markets, and other key verticals. Governance concerns from the interim CFO appointment and accounting investigation add further risk, while concentrated exposure to the UK, Europe, payments, and financial services leaves Endava vulnerable to macro softness, FX pressure, and client-specific weakness.