Tuesday, Guggenheim initiated coverage on Endava PLC (NYSE:DAVA), a digital services company, with a Buy rating and set a price target of $60.00. The firm sees the recent decline in Endava's share price as an opportunity for investors to purchase a high-quality stock at a lower cost.
The coverage comes after Endava's shares experienced a significant drop. The company's stock fell by 42% following its earnings release on February 29, 2024, while the S&P 500 index saw a modest increase of 0.50% during the same timeframe.
Guggenheim's analysis suggests that the challenges faced by Endava are cyclical rather than structural, indicating that the downturn may be temporary. The firm believes that Endava is well-positioned to gain from an expected uptick in discretionary spending.
Endava specializes in providing digital transformation services to its clients. The company's position as a pure-play in the digital sector is seen as an advantage, especially as markets anticipate a recovery in spending on digital services.
The $60.00 price target reflects Guggenheim's confidence in Endava's potential for growth. This target is a significant increase from the current trading levels, following the recent earnings-related decline.
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