Is Endava's (DAVA) Cautious Outlook a Turning Point in Its Long-Term Value Proposition?

• Endava recently reported fourth-quarter earnings for the period ended June 30, 2025, with sales of £186.78 million and net income of £1.17 million, completing a buyback of 6,722,491 shares for US$111.2 million.
• Despite surpassing analyst earnings expectations, the company released cautious revenue guidance and highlighted ongoing macroeconomic pressures impacting client spending and operational stability.
• We'll now examine how Endava's successful share repurchase, paired with weaker guidance, affects its long-term investment narrative.

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Endava Investment Narrative Recap

For investors to have confidence in Endava shares, they must believe in the company’s ability to turn its investments in AI-driven services and efficient project execution into stable long-term growth, even as client spending remains uncertain. The recent cautious guidance points to macroeconomic headwinds continuing to impact Endava’s near-term revenue, so the biggest short-term catalyst, an uptick in client project commencements, looks on hold, and the risk of further delays remains very present.

Of the recent announcements, the completed share buyback stands out most, especially as it follows a quarter with softer sales and guidance. By reducing the number of shares outstanding, this could provide support to earnings per share, but does not materially address the uncertain demand outlook, which remains the most important driver for the business right now.

On the other hand, with major clients still recalibrating their spending, investors should be mindful of the risk that project delays could ...

Read the full narrative on Endava (it's free!)

Endava's outlook anticipates £889.6 million in revenue and £62.0 million in earnings by 2028. This scenario assumes 4.5% annual revenue growth and a £43.8 million earnings increase from the current £18.2 million.

Uncover how Endava's forecasts yield a $18.93 fair value, a 86% upside to its current price.

Exploring Other Perspectives

Seven fair value estimates from the Simply Wall St Community range from £12.26 to £21.87 per share. While some see substantial upside, many remain focused on Endava’s near-term revenue risk and the unpredictable timing of client project decisions.

Explore 7 other fair value estimates on Endava - why the stock might be worth just $12.26!

Build Your Own Endava Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Endava research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Endava research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Endava's overall financial health at a glance.

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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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