Endava plc Stock Drops 10.68% Despite Strong Fundamentals

Global Interactive's stock price plummeted by 10.68% during pre-market trading on July 7, 2025, marking a significant downturn for the company.

Endava plc, a prominent player in the tech services sector, has been experiencing a disconnect between its stock price and its robust fundamentals. Despite a projected revenue of £1.27 billion by 2030 and a significant increase in earnings per share (EPS), the company's stock price remains relatively low, trading at just over $15 per share as of June 2025. This valuation discrepancy presents an opportunity for investors who are willing to overlook short-term volatility and focus on the company's strategic geographic diversification and expanding client base.

Endava's current P/E ratio of 37.65, while seemingly high, is actually lower than its peak in 2019 and 2023. Its Price-to-Sales (P/S) ratio of 0.92 is less than half the industry median, indicating that the market is not fully valuing Endava's top-line growth. The company's revenue has expanded from £84.1 million in 2015 to £794.7 million in 2023, a 9-fold increase over eight years. This growth is driven by its agile software development model and focus on cloud computing, AI, and digital transformation, making it a critical partner for industries such as finance, healthcare, and retail.

Endava's geographic diversification, with operations in 25 countries and a strategy to expand into emerging markets, helps buffer it from regional economic headwinds. Its client retention rate of over 90% underscores the stickiness of its services. The company's earnings trajectory is another pillar of its case, with a 53% increase in net income to £94.2 million in 2023 compared to £13.5 million in 2015, signaling a maturing business model that is scaling efficiently.

Despite near-term headwinds such as declining margins and macroeconomic sensitivity, Endava's strategic advantages, including client diversification, a talent advantage, and an innovation pipeline, make it a compelling investment opportunity. The company's stock is trading at a significant discount to its 2025 forecast, and investors should consider accumulating shares at current levels with a target price of $50–$80 over the next two years as growth expectations reset. Endava's stock is a prime example of a valuation anomaly, undervalued and underappreciated, and primed for a revaluation.