On Tuesday, Susquehanna maintained a Positive rating on Endava PLC (NYSE:DAVA) but reduced the price target to $66 from $83, citing industry-wide challenges in the short-duration IT Services segment. The firm's analysis follows insights gathered from a conference that included discussions with IT Services companies such as Infosys (NS:INFY), Cognizant (NASDAQ:CTSH), and WNS (NYSE:WNS). These companies revealed a shared concern over the lack of visibility in short-term projects.
The decision to adjust the price target is also influenced by recent guidance that suggests a need to lower Endava's financial estimates to the lower end of the spectrum. Despite the downward revision, the Positive rating remains unchanged, with the expectation that application development will stabilize and Endava will regain its momentum in the market.
The rationale behind maintaining the Positive outlook lies in the belief that the application development sector, where Endava operates, will find its footing after the current period of uncertainty. This optimism is held even as consensus forecasts are anticipated to align more closely with Susquehanna's conservative estimates.
The new price target of $66 reflects a valuation based on 31 times the forecasted FY26 earnings per share (EPS) of £1.66. This adjustment mirrors the firm's recalibration of expectations for Endava, taking into account the prevailing conditions in the IT Services industry that are affecting project visibility and, consequently, financial projections.
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