Update shared on06 Sep 2025
Fair value Decreased 19%Endava’s price target has been cut from $23.49 to $18.93 due to delayed client IT spending amid macroeconomic and sector headwinds, compounded by near-term growth and margin pressures that outweigh long-term strategic positives.
Analyst Commentary
- Elevated macroeconomic uncertainty and trade concerns are resulting in delayed client IT investments and a cautious demand environment.
- Endava’s growth forecast for FY26 indicates flat or slightly negative year-over-year revenue, signaling a transitional period with near-term margin pressure expected to outweigh potential long-term strategic benefits.
- The wider payments, processors, and IT services sectors have underperformed the S&P 500, due to overly optimistic expectations and ongoing challenges related to elections and consumer sentiment.
- Despite current sluggish pipeline conversion and a cloudy near-term outlook, forecasts are considered de-risked, with potential estimate upward revisions if market conditions stabilize or improve.
- Bullish analysts cite Endava’s investments in Gen AI and a growing partner ecosystem as positive longer-term catalysts, though these are not enough to offset cautious guidance for the immediate term.
What's in the News
- Repurchased 4,746,585 shares for $71.5 million (8.02% of shares) from May 1 to August 29, completing the buyback of 6,722,491 shares (11.34%) for $111.2 million under the program announced in February.
- Issued guidance for Q1 FY2026, projecting revenue of £181.0–£183.0 million, reflecting a constant currency year-over-year decrease of (6.0)% to (5.0)%.
- Full year FY2026 revenue guidance given at £750.0–£765.0 million, indicating a constant currency revenue change of (1.5)% to 0.5% year-over-year.
Valuation Changes
Summary of Valuation Changes for Endava
- The Consensus Analyst Price Target has significantly fallen from $23.49 to $18.93.
- The Future P/E for Endava has significantly risen from 22.36x to 50.06x.
- The Net Profit Margin for Endava has significantly fallen from 6.97% to 2.73%.
Disclaimer
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