Endava Faces Analyst's Cautious Outlook Amid Industry Uncertainty, Price Target Reduced

Susquehanna analyst James E Friedman reiterated a Positive rating on the shares of Endava Plc DAVA, lowering the price target from $104.00 to $100.00.

The analyst believes industry uncertainty looms large on Endava, for which September estimates have been trimmed modestly for conservatism.

The analyst notes that Endava's current revenue per workday is growing +2%, down from +10% prior. 

Considering these , Friedman models 1Q24 revenues at £199.5 mln (prior £209.9 mln), adjusted PBT margins assumptions at 19.8% (prior 19.8%), and adjusted EPS at £0.54 (prior £0.56). 

For FY24, the analyst lowered revenue estimates at £823.2 mln (prior £833.6 mln) and adjusted EPS at £2.37 (prior £2.40). 

The analyst flags the risk of losing a top 10 customer or a further market slowdown in either Payments or Digital IT Services, which may hamper growth for Endava.

However, the analyst adds that DAVA will benefit from technological change, and the (major) DEK acquisition will help diversify revenue.

Price Action: DAVA shares are trading higher by 5.54% to $48.22 on the last check Monday.