On Friday, Needham analysts increased their price target on Endava PLC (NYSE:DAVA) shares to $43.00, up from the previous $36.00, while maintaining a Buy rating. Endava, a technology company, has been recognized as the top pick for 2025 by the firm, which has also added the stock to the Needham Conviction List. According to InvestingPro data, the company appears undervalued based on its Fair Value analysis, with 4 analysts recently revising their earnings expectations upward for the upcoming period.
The endorsement comes after a period where Endava's performance has faced challenges, with InvestingPro data showing a 58.4% decline in stock price over the past year. Despite this setback, the company maintains strong fundamentals with a current ratio of 1.9, indicating healthy liquidity. The company's efforts to diversify its industry and delivery mix through organic growth and mergers and acquisitions are seen as positioning it for a strong start in calendar year 2025.
Analysts at Needham believe that Endava is well-placed to benefit from the increasing and broadening demand for next-generation technologies, including the rapid adoption of AI solutions by Global 2000 companies. This potential for growth is seen as a catalyst for the stock's re-rating and is expected to help it close the valuation gap with its peers.
The revised price target reflects a positive outlook on Endava's future performance, with expectations of an uptick in organic growth over fiscal year 2025 and into fiscal year 2026. While the stock is currently trading at a forward fiscal year 2026 P/E multiple of approximately 14.5x, InvestingPro reveals a current P/E ratio of 212.5x, suggesting significant growth expectations. Get access to 10+ additional ProTips and comprehensive valuation metrics with an InvestingPro subscription, including detailed insights from our Pro Research Report covering what really matters about Endava's financial position and growth prospects.
Endava's strategic moves and the anticipated demand for its services in the evolving technology landscape have contributed to Needham's confidence in the company's stock. With a market capitalization of $1.86 billion and expected revenue growth of 9% in FY2025, the company shows promising potential. The firm reiterates its Buy rating and highlights Endava's potential for a valuation increase as the company continues to execute its growth strategy.
In other recent news, global technology company Endava reported fiscal first-quarter results surpassing expectations with a revenue increase to GBP 195.1 million, largely driven by the strategic acquisition of GalaxE. This move contributed to a 201.6% surge in healthcare vertical revenue and a 32.5% increase in North American market revenue. Despite these gains, the company faced a decrease in adjusted profit before tax to GBP 19.2 million, reflecting decreased operating margins.
On the analyst front, BofA Securities initiated coverage on Endava with a neutral rating and a price target of $29.00, citing the company's role in digital transformation across various industries. Meanwhile, Needham maintained a Buy rating on Endava's shares, increasing the price target to $36 from $33, and TD Cowen also raised its price target from $35 to $36, maintaining a Buy rating.
Endava's focus on artificial intelligence and General AI capabilities was highlighted during an investor day event held in New York City. In addition, the company has secured significant partnerships with Usoft, Mambu, and GoCardless and plans to leverage its expanded delivery capabilities in India and prioritize recruitment in high-demand areas such as data, AI, and cloud technologies.
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