Will Endava (DAVA) be Able to Bounce Back?

Night Watch Investment Management, an investment management firm, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Despite experiencing high volatility in individual stocks during Q4, the fund finished the quarter approximately flat. Overall, the firm is pleased with how 2025 unfolded. Like 2024, the results were broad-based and did not rely on any single security.  In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Night Watch Investment Management highlighted stocks such as Endava plc (NYSE:DAVA). Endava plc (NYSE:DAVA) is a technology services provider for clients in the consumer products, healthcare, mobility, and retail verticals. On January 6, 2026, Endava plc (NYSE:DAVA) stock closed at $6.67 per share. One-month return of Endava plc (NYSE:DAVA) was -0.30%, and its shares lost 78.65% of their value over the last 52 weeks. Endava plc (NYSE:DAVA) has a market capitalization of $362.365 million.

Night Watch Investment Management stated the following regarding Endava plc (NYSE:DAVA) in its fourth quarter 2025 investor letter:

“Endava plc (NYSE:DAVA) is an IT services provider, which the market perceives as an AI loser. Since this industry bills by the hour, the amount of billable work goes down if programming becomes more efficient. The alternative view is that this lower cost enables different kinds of IT projects for DAVA’s customers and the lower price per project will be compensated for by higher volumes.

When AI just came onto the scene, large corporates delayed their IT investment decisions to figure out how to apply AI to their business. Earlier in 2025, we started seeing the first signs of companies beginning to commit to large AI-related IT spending. Unfortunately, the business uncertainty following the Liberation Day tariffs postponed this recovery. We think 2026 will be the year when Endava returns to growth. Unfortunately, DAVA has also underperformed its peers because of less-than-stellar execution. The company now trades at 0.3x sales, versus 1-2x for peers. We think that normalized Net Income margins are around 10%, putting the company around 3x P/E once the business stabilizes and rationalizes its headcount. It’s even cheaper if they manage to return to growth.”

Is Endava plc (DAVA) the Undervalued Quantum Computing Stock to Buy Now?

Endava plc (NYSE:DAVA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 14 hedge fund portfolios held Endava plc (NYSE:DAVA) at the end of the third quarter, up from 11 in the previous quarter. While we acknowledge the risk and potential of Endava plc (NYSE:DAVA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Endava plc (NYSE:DAVA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.