Results: Endava plc Beat Earnings Expectations And Analysts Now Have New Forecasts

There's been a major selloff in Endava plc (NYSE:DAVA) shares in the week since it released its third-quarter report, with the stock down 24% to US$15.07. It looks like a credible result overall - although revenues of UK£195m were what the analysts expected, Endava surprised by delivering a (statutory) profit of UK£0.18 per share, an impressive 62% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

We've discovered 1 warning sign about Endava. View them for free.

Following last week's earnings report, Endava's twelve analysts are forecasting 2026 revenues to be UK£790.6m, approximately in line with the last 12 months. Per-share earnings are expected to leap 67% to UK£0.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£840.1m and earnings per share (EPS) of UK£0.55 in 2026. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Check out our latest analysis for Endava

The consensus price target fell 22% to US$25.57, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Endava analyst has a price target of US$52.35 per share, while the most pessimistic values it at US$17.01. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Endava's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 1.1% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that Endava is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Endava's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Endava going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Endava that you should be aware of.

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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.