DAVA Stock Forecast & Price Target

Endava's revenue in North America experienced a 5% quarter-over-quarter increase, indicating positive momentum following a reclassification of a large payment client from the UK. The company's strategic focus on artificial intelligence is evident from a 1.4% sequential increase in headcount, which aligns with its intent to enhance workforce capabilities to meet growing demand in digital transformation services. Despite facing economic pressures, Endava's strong positioning in key industry verticals, combined with anticipated cyclical recovery and AI adoption among global enterprises, supports a fundamental outlook for sustained double-digit organic growth over the long term.

Endava reported a 1Q FY26 revenue of £178.2 million, reflecting an 8.6% year-over-year decline, which is indicative of weakening demand and client spending pressures. Management has downgraded the FY26 revenue guidance to £735 million–£752 million, anticipating a further decline due to subdued pipeline conversion and an unexpected client credit. Additionally, the company's introduction of a lower 2Q guidance combined with increased operational expenses suggests a challenging environment that may lead to further downward pressure on estimates and valuation.