Endava Plc Cl A Ads
Endava Plc Cl A Ads
IBD Stock Analysis
- DAVA stock nearing 143.60 buy point from 7-week consolidation
- Relative strength line hitting new highs in bullish sign
- With market in correction, investors should be cautious
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:55PM EDT on
Technology services provider Endava (DAVA) is the IBD Stock Of The Day as its relative strength line hits a new high in an unsettled market. Endava stock is nearing an entry point after reporting fiscal fourth-quarter earnings that topped expectations.
DAVA stock had delayed reporting its June-quarter earnings, which were released Sept. 28. Also, the tech services company issued fiscal 2022 revenue guidance above consensus estimates.
U.K.-based Endava belongs to the Computer-Technical Services industry group along with Accenture (ACN), Epam Systems (EPAM) and Globant (GLOB). The IT services group ranks eighth out of 197 industry groups that IBD tracks.
Endava focuses on new technology, custom product development and digital transformation work. Its biggest customers are in the finance, telecommunications and retail industries. Founded in 2000, the company has its headquarters in London.
Banking Customers A Bright Spot
Endava stock has a Relative Strength Rating of 95 out of a best-possible 99. The 95 RS Rating means that Endava stock is outperforming 95% of all stocks in terms of price strength. The market’s biggest winners typically have an 80 or better RS Rating.
Meanwhile, the IT services firm’s relative strength line has hit a new high. Stocks showing strength during market corrections often become leaders in the next uptrend.
In the June quarter, Endava’s revenue rose 65% to $184.6 million including acquisitions. Earnings per share jumped 104% to 57 cents.
Endava forecast fiscal 2022 revenue growth in a range of 38% to 40%.
“Helped by acceleration from North America and good growth across the payments/banking vertical, DAVA put up another strong quarter,” Susquehanna analyst James Friedman said in a report.
He added, “Supported by a sharp increase in new accounts and average spend, visibility has improved across geographies and verticals.”
DAVA Stock: Hiring Ramps Up
A small-cap stock, Endava holds a Composite Rating of 98, according to IBD Stock Checkup. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance. The best growth stocks have a Composite Rating of 90 or better.
However, Deutsche Bank analyst Bryan Keane has a hold rating on Endava stock.
“DAVA stock continues to expand its scope of work with existing clients while adding new logos as total client numbers grew to 615 (from 416 a year ago),” Keane said in a report. “A large number of new, smaller projects came online that DAVA expects will expand into larger engagements.”
Endava Acquisition Spree
He added, “Due to the acceleration in demand, net hiring ramped up in the June quarter with total headcount rising 34% year over year, reaching 8,883.”
Meanwhile, Endava has been acquisitive. In 2019, it bought Exozet, a German IT services firm. Last year, Endava acquired Dublin-based Comtrade Digital Services, a software engineering services and solutions provider.
In North America, Endava bought Levvel in April. A month earlier, it bought Croatia-based Five along with its U.S. subsidiary.
“Its acquisition-focused capital allocation strategy will allow the company to continue diversifying revenue exposure and digital capabilities,” said Morgan Stanley analyst James Faucette in a report.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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