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California-based ServiceNow, Inc. (NOW) provides end-to-end intelligent workflow automation platform solutions for digital businesses. Valued at a market cap of $208.3 billion, the company’s solutions address the needs of many departments within an enterprise, including IT, HR, facilities, field service, marketing, customer service, security, legal & finance.
Shares of this software company have significantly outperformed the broader market over the past 52 weeks. NOW has rallied 53.6% over this time frame, while the broader S&P 500 Index ($SPX) has increased 30.6%. Moreover, shares of NOW are up 42.3%, compared to SPX’s 23.6% gain on a YTD basis.
Zooming in further, NOW’s price performance has also outshined the Technology Select Sector SPDR Fund’s (XLK) 25.5% gain over the past 52 weeks and 19.2% return on a YTD basis.
Shares of NOW soared 5.4% after its better-than-expected Q3 earnings release on Oct. 23. Its adjusted earnings of $3.72 per share surpassed the Wall Street estimates of $3.46 and increased 27.4% from a year ago. Its revenue climbed 22% year-over-year to $2.8 billion and outpaced the estimates of $2.7 billion.
Along with this, the company’s subscription revenue grew 23%, reaching $2.7 billion. The strong performance can be primarily attributed to NOW’s continuous innovation in the field of AI and robust demand for its Now Platform. The company’s raised full-year 2024 top-line guidance might have further bolstered investor confidence.
For the current fiscal year, ending in December, analysts expect NOW’s EPS to grow by a staggering 137.3% year over year to $7.07.The company’s earnings surprise history is promising. It surpassed the consensus estimates in each of the last four quarters.
Among the 33 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 28 “Strong Buy,” two “Moderate Buy,” two "Hold,” and one “Strong Sell” rating.
On Nov. 12, Wells Fargo raised the company’s price target to $1150 while maintaining an “Overweight” rating. This indicates a 14.4% upside from the current levels.
As of writing, the company is trading above its mean price target of $998.48. However, its Street-high price target of $1170 suggests an upside potential of 16.4% from current levels.
