A Fresh Look at Endava (NYSE:DAVA) Valuation After Disappointing Results and Major $100 Million Partnership Announcement

Endava (NYSE:DAVA) landed in the spotlight this week as it delivered disappointing first-quarter results and trimmed its full-year outlook. At the same time, the company announced a multi-year partnership worth up to $100 million with a leading payments company.

See our latest analysis for Endava.

Endava’s sharp 26.3% drop in share price following its Q1 results reflects growing concerns about weak earnings and a cautious outlook, compounding what has been a tough year as its one-year total shareholder return now sits at -76.4%. Momentum has faded substantially, even as management points to multi-year strategic deals and AI transformation as evidence of long-term growth potential.

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With shares now trading at a steep discount after a year of heavy losses, the question is whether Endava’s future growth is already reflected in its low price or if this presents a genuine buying opportunity.

Most Popular Narrative: 59% Undervalued

According to the most widely followed narrative, Endava's fair value is set at $17.08, which is sharply higher than the last close of $6.95. The estimate draws from a detailed view of Endava's future growth potential and strategic initiatives. This sets the stage for a closer look at the assumptions behind it.

The company's strategy of securing larger and longer-term deals, particularly in core modernization projects, is expected to contribute to meaningful revenue growth and stability in earnings, despite longer sales cycles.

Read the complete narrative.

How do analysts justify a fair value nearly 2.5 times the current share price? The answer lies in the narrative's big bets on expanding profit margins, bolder earnings targets, and a future valuation multiple that challenges industry conventions. Curious what numbers drive such an ambitious forecast? One crucial metric could completely shift perceptions about Endava's undervaluation.

Result: Fair Value of $17.08 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the longer sales cycles for AI projects and economic uncertainty in key markets could make Endava's path to recovery less predictable.

Find out about the key risks to this Endava narrative.

Build Your Own Endava Narrative

If you have a different take or want to dig into the details yourself, it's quick and simple to build your own perspective in just minutes, so why not Do it your way

A great starting point for your Endava research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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