Endava Earnings: Further Visibility on Recovery Well Received

Narrow-moat Endava reported third-quarter results and guidance broadly in line with our expectations, which sent shares up over 10% in early trading. Following the acquisition of GalaxE, Endava now expects fiscal-year 2024 revenue of GBP 741 million-GBP 743 million, representing a constant-currency decline of between 4.5% and 4% versus fiscal 2023, and adjusted diluted EPS to be GBP 1.13-GBP 1.14. As we noted last quarter, amid serious doubts over the path of revenue recovery following their slashed outlook for the year, Endava needs several quarters of positive results to regain investor confidence. With no expected changes to forecasts, we maintain our fair value estimate of $62, and we see the shares as undervalued.