DAVA Stock Forecast & Price Target

Endava has demonstrated a positive outlook with a notable 5% revenue increase in North America quarter-over-quarter, driven by a significant client reclassification from the UK. The company is strategically investing in AI initiatives, reflected in a 1.4% increase in headcount, suggesting a commitment to enhancing its service capabilities. Additionally, Endava's positioning within the digital transformation space, coupled with expectations of accelerating demand and potential benefits from macroeconomic improvements, supports a promising trajectory for double-digit organic growth in the long term.

Endava reported a 1Q FY26 revenue of £178.2 million, reflecting an 8.6% year-over-year decline, alongside a downward revision of its FY26 revenue guidance to £735 million–£752 million, indicating continued demand pressures and higher expenses, particularly related to AI investments. The company's performance fell short of expectations and contributed to a cautious outlook, as management noted that 70% of this revenue forecast is already contracted yet still anticipates a revenue decline in the upcoming quarter. As a result, analysts foresee significant downside risk to estimates, with concerns that valuation may compress below a price-to-earnings multiple of approximately 5x for FY27.