Endava Plc (DAVA), a UK-based IT services company specializing in digital transformation, is catching the attention of analysts. JPMorgan analyst Tien-tsin Huang has declared Endava a ‘top pick’ for the second half of 2024, highlighting its significant potential for growth in the digital IT sector.
Founded in 2006, Endava primarily serves clients in payments, financial services, technology, media, and telecom, with a majority of its revenue coming from the UK and Europe. The company boasts a market capitalization of $1.76 billion, classifying it as a small-cap stock primed for near-term growth.
JPMorgan, maintaining an Overweight rating on Endava stock, has set a price target of $47, representing a potential upside of over 54% from current levels. The investment firm’s bullish outlook stems from Endava’s ability to capitalize on the growing need for digital transformation across various industries. As more businesses undergo technological disruption, Endava is strategically positioned to thrive, particularly in rapidly expanding sectors like payments, banking, and telecoms.
Huang expects Endava to deliver mid- to long-term organic revenue growth, aligning with the broader high-growth areas of the technology marketplace. The analyst notes that Endava trades at the low end of its peers’ valuation range, offering potential near-term upside. JPMorgan projects Endava to achieve over 20% top-line growth, comparable to other prominent players in the space like EPAM Systems Inc (EPAM) and Globant SA (GLOB).
Despite concerns about macroeconomic sensitivity and potential margin pressure, JPMorgan remains optimistic about Endava’s ability to overcome these challenges. The company’s focus on high-growth sectors and its competitive edge in capturing market share make it a compelling investment choice in the evolving IT landscape.
Investors are eagerly awaiting Endava’s next earnings report, particularly for updates on its FY25 guidance. The upcoming report could further solidify Endava’s position as a long-term winner in the digital IT services space.
Endava’s growth trajectory, fueled by its focus on digital transformation and its ability to tap into the burgeoning needs of various industries, makes it a company worth watching in the ever-changing IT landscape.
