ServiceNow has rebounded off the 10-week moving average and is in a buy range that goes up to 783.10. So ServiceNow stock is today's selection for IBD 50 Stocks To Watch, as shares rise after a second test of the line.
The enterprise software company has best possible scores of 99 on both its Composite Rating and EPS Rating. The Relative Strength Rating of 92 also shows that ServiceNow stock is a market leader and has outperformed 92% of other stocks. Additionally, its shares rank first in the enterprise software group, according to IBD MarketSmith.
The company offers automation tools for a variety of business needs, ranging from customer service to app development.
ServiceNow exceeded its outlook for both revenue and profitability in its fourth quarter. Sales grew 26% to $2.4 billion while earnings per share of $3.11 rose 36%.
ServiceNow Stock: More Subscription Revenue
The company gets its revenue by making its software available on a subscription basis. The company also offers a generative artificial intelligence option through its platform, Now Assist.
Revenue from subscriptions grew 27% in the fourth quarter. For the current quarter, the company expects subscription revenue to rise 25% from the prior year.
A rising number of funds have been net buyers of ServiceNow stock in the past seven quarters, and more recently over the last 13 weeks. That has earned ServiceNow an Accumulation/Distribution Rating of B.
Further, fund managers own 52% of outstanding shares. The Harbor Disruptive Innovation Fund (HAMGX) and the Franklin Growth Fund (FKGRX) hold shares of ServiceNow.
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