DAVA Stock Forecast & Price Target

Endava has demonstrated a sequential revenue increase of 5% in North America, attributed to a significant client reclassification, which signals strong demand in the payments sector. The company is actively investing in AI initiatives, as evidenced by a 1.4% sequential headcount growth and an increase in average billable headcount by 75 basis points, indicating a strategic focus on enhancing its service capabilities. Endava's strong positioning in digital engineering and transformation services is expected to drive solid long-term growth, potentially leading to substantial value creation as the market conditions improve and AI adoption expands among its client base.

Endava reported a 1Q FY26 revenue of £178.2 million, representing an 8.6% decrease year-over-year and a 4.6% decline quarter-over-quarter, which is indicative of ongoing demand pressures. The company's revenue outlook for FY26 was revised downward to between £735 million and £752 million, reflecting a lack of favorable client engagements and heightened expenses associated with AI investments. Management has signaled a subdued growth forecast, anticipating a further revenue decline in the upcoming quarters, which raises concerns about the company's financial trajectory.