DAVA Stock Forecast & Price Target

Endava reported a 6.6% year-over-year revenue increase of £195.6 million for 2Q FY25, signaling growth momentum. The company's earnings per share (EPS) expectations have risen to £1.20-£1.23, driven by an advantageous tax rate and improved margins, reflecting better profitability outlook. Furthermore, the anticipated acceleration in demand for next-generation technologies, particularly AI adoption among Global 2000 companies, is expected to positively impact Endava's organic growth as the company continues to fulfill digital transformation needs in key sectors.

Endava's recent financial performance reveals concerning trends, including flat revenue growth in North America and Rest of World, along with a 4% decline in Europe, largely attributed to foreign exchange headwinds and challenges in the technology, media, and telecom sectors. The company's forecast for FY25 indicates a downward revision in expected revenue, projecting a range of £795-£800 million, which represents a growth rate shift from the previously expected 7.3-8% to a potential downside risk scenario affecting EPS valuations. Additionally, a recent decline in headcount, coupled with underperformance in key verticals such as payments and telecom, suggests that demand remains uncertain, leading to an increasingly cautious outlook for future hiring and overall business growth.