DAVA Stock Forecast & Price Target

Endava has recorded a 5% quarter-over-quarter revenue growth in North America, largely driven by the reclassification of a significant payments client from the UK. The company's strategic investment in AI initiatives is evidenced by a 1.4% increase in headcount, indicating a commitment to enhance its service offerings as AI adoption accelerates. Furthermore, despite recent economic challenges, Endava's positioning in digital transformation services is expected to support long-term double-digit organic growth, bolstered by the establishment of a multi-year $100 million relationship with a key payments client.

Endava reported a 1Q FY26 revenue of £178.2 million, representing an 8.6% year-over-year decline, alongside a disappointing guidance revision for FY26, now projected between £735 million and £752 million. The company indicated weakening demand, an unexpected client credit, and higher operational costs associated with AI investments as primary factors influencing its negative outlook. Consequently, both gross and operating margins fell below expectations, raising concerns about further downside risks to revenue growth and valuation metrics.