Endava Price Target Cut to $5; Q3 Revenue £179M and EPS £0.05 Miss Guidance
JPMorgan downgraded Endava to Underweight and cut its December 2026 price target to $5 from $9 after Q3 revenue of £179 million and adjusted EPS of £0.05 missed forecasts, citing weak demand and execution issues. It lowered fiscal 2026 revenue guidance to £722-726 million and EPS outlook to £0.45-0.49.
1. JPMorgan Downgrade and Price Target Reduction
JPMorgan moved Endava from Neutral to Underweight, slashing its December 2026 price target to $5 from $9. Analysts highlighted persistent execution problems and slowing pipeline conversions as key reasons for reduced investor confidence.
2. Q3 Financial Performance
Endava reported third-quarter revenue of £179 million, below guidance and consensus, with adjusted EPS of £0.05 missing forecasts. Margins deteriorated due to weaker utilization and increased AI-related investment spending.
3. Revised Fiscal 2026 Outlook
The company now expects fiscal 2026 revenue of £722-726 million, down from a prior £736-750 million range, and cut adjusted EPS guidance to £0.45-0.49 from £0.80-0.86. JPMorgan also trimmed 2027 earnings estimates by over 40%.
4. Execution and AI Contract Challenges
Management cited delayed deal conversions, macroeconomic caution among clients, Middle East disruptions and longer timelines for large AI outcome-based contracts. AI-related sales accounted for roughly 15% of Q3 revenue, but these deals are taking longer to close and ramp.