DAVA Stock Forecast & Price Target

Endava has demonstrated positive financial momentum, with a 5% quarter-over-quarter revenue increase in North America and a 1.4% rise in headcount, indicating ongoing investment in artificial intelligence initiatives. The company's focus on digital transformation services positions it well for potential double-digit organic growth in the long term, buoyed by an eventual recovery in demand across key industry verticals. Additionally, increasing average billable headcount and favorable assumptions regarding AI spending suggest that Endava could capitalize on emerging opportunities within its client base, reinforcing a strong growth outlook.

Endava's 1Q FY26 revenue declined by 8.6% year-over-year to £178.2 million, missing management's expectations and reflecting a continued downturn in demand due to client spending pressures. The company's decision to adjust its FY26 revenue guidance downward to a range of £735 million to £752 million indicates ongoing challenges, with anticipated revenue growth projected between -1.5% and +0.5% year-over-year. Additionally, the firm's higher expenses, particularly from AI-led investments, further complicate its financial outlook amidst a backdrop of a subdued pipeline conversion and a reliance on contracted revenue, which raises concerns about future performance.