/ServiceNow%20Inc%20building%20in%20Silicon%20Valley-by%20Sundry%20Photography%20via%20iStock.jpg)
With a strong market cap of $170.7 billion, ServiceNow, Inc. (NOW) is a leading provider of cloud-based platforms that automate and optimize digital workflows for enterprises across various industries. Based in Santa Clara, California, the company offers solutions for IT, HR, customer service, and more, driving digital transformation through AI, machine learning, and robotic process automation.
Shares of this digital workflow leader have significantly outperformed the broader market over the past 52 weeks. NOW has notably risen 53.8% during this period, contrasting with the S&P 500 Index's ($SPX) 28.3% rally. In 2024, NOW shares surged 17.9%, slightly surpassing SPX's 17.6% YTD gain.
Zooming in further, NOW's performance outpaces the North American Tech-Software iShares ETF (IGV), which has recorded gains of 28.8% over the past 52 weeks and a 6.6% increase on a YTD basis.
ServiceNow has outperformed due to its successful expansion into AI-driven solutions and effective monetization of new generative AI technologies. Moreover, the stock surged 13.4% on Jul. 25 due to its Q2 earnings exceeding Wall Street expectations on both top and bottom lines. Additionally, the strong 23% annual growth in subscription revenues on a currency-adjusted basis and promising forward guidance bolstered investor confidence.
For the current fiscal year, ending in December, analysts expect NOW's EPS to grow an impressive 129.5% year over year to $6.84 per share. The company's earnings surprise history is promising. It topped the consensus estimates in all of the last four quarters.
The consensus rating among the 33 analysts covering the stock is a “Strong Buy.” That’s based on 28 “Strong Buy” ratings, two “Moderate Buys,” two “Holds,” and one “Strong Sell.”
This configuration is slightly less bullish than three months ago, with no “Strong Sell” ratings on the stock.
On Jul. 25, Stifel analyst Brad Reback raised the price target on ServiceNow to $900 and maintained a “Buy” rating after the company exceeded Q2 expectations and raised its fiscal year 2024 subscription revenue guidance.
The mean price target of $871.81 represents a premium of only 4.7% to NOW's current levels. The Street-high price target of $950 implies a modest potential upside of 14.1% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
