We came across a long thesis on Endava plc (NYSE:DAVA) on ValueInvestorsClub by BlueFIN24. In this article we will summarize the bulls’ thesis on DAVA. The company’s shares were trading at $27.66 when this thesis was published, vs. the closing price of $30.49 on Jan 2nd.
Endava Plc (NYSE:DAVA) is a UK-based IT solutions company that primarily assists clients from financial services, payments, media, technology and telecom industries with their digital transformation efforts by creating customized software. The company is usually hired on an outsourced basis as project developers and designers for digital transformation, AI implementation, data modernization and other projects.
The bullish thesis centers on a potential acceleration in IT spending after 1-2 years of sluggish post-COVID demand. The author argues that companies have finally begun to understand how difficult it is to incorporate AI capabilities into daily processes and that the AI transition is unlikely to happen without assistance from external software developers like Endava plc (NYSE:DAVA). The author believes that DAVA will benefit from the upcoming digital and AI transformation because the company focuses on developing new projects rather than maintaining existing ones and is rapidly expanding into new verticals, which will boost its total addressable market.
With that in mind, the author expects DAVA to soon return to a double-digit revenue CAGR, primarily driven by 20%+ growth in AI-related projects once they move beyond the initial planning stage. Combined with stable EBITDA margins, the company’s shares could trade above $60.00, representing a 97% upside from the Jan 2nd closing price.
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This article was originally published at Insider Monkey.
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