DAVA Stock Forecast & Price Target

Endava reported a 2Q FY25 revenue of £195.6 million, reflecting a year-over-year increase of 6.6% and a sequential growth of 0.3%, indicating a stable financial performance amidst evolving market conditions. Expectations for earnings per share have been revised upward to £1.20-£1.23, driven by a favorable tax rate and improving margins, which highlights the company’s ability to enhance profitability. The anticipated acceleration in demand for AI solutions, particularly from Global 2000 firms, positions Endava favorably for strong organic growth as it capitalizes on rapid technological advancements in its key markets.

Endava's revenue growth has shown signs of weakness, particularly with flat performance in North America and the Rest of the World, while Europe experienced a 4% decline due to foreign exchange headwinds and challenges within the Technology, Media, and Telecom (TMT) sector. For FY25, the company revised its revenue expectations down to £795-£800 million, indicating potential downside risk to estimates amidst a cautious hiring approach and a sequential decline in headcount. Additionally, Endava’s industry concentration has led to revenue softness relative to peers, with notable declines in key verticals such as payments, TMT, and insurance, raising concerns about its competitive positioning and growth trajectory.