DAVA Stock Forecast & Price Target

Endava is currently facing elongated deal cycles and a shift towards higher-margin outcome-based work, leading to lower profits and revenue in the short term. However, the company's deep expertise in digital engineering, especially in high-growth verticals such as payments, TMT, and private equity, positions it well for double-digit organic growth in the long term as global corporations prioritize next-generation technologies. While the company has a solid balance sheet with a significant amount of cash and manageable debt, the current uncertainty and lack of visibility on revenue and profitability stabilization warrant a Neutral rating.

Endava is a next-generation IT services company that primarily serves clients in the UK and Europe in the payments and financial services, technology, media, and telecom industries. Its F3Q26 results came in below expectations with declining revenue and margins, prompting a lower FY26 outlook and a transitional year in FY27. The company is facing challenges with pipeline conversion and AI productivity harvesting, which could hurt revenue and margin recovery. Furthermore, its reliance on the financial services sector and exposure to foreign currency fluctuations pose additional risks. In our base case, we project a P/E multiple of ~7x on our FY27 EPS estimate, resulting in our lowered price target of $5.