ServiceNow (NOW) Receives Multiple Price Target Hikes on a Strong Beat-and-Raise
ServiceNow (NASDAQ: NOW) delivered very strong second-quarter results to yield at least 10 price target hikes from leading Wall Street analysts.
NOW reported revenue of $1.41 billion to top the $1.36 billion expected from surveyed analysts while earnings per share were reported at $1.42 vs $1.22 expected.
“I’m so proud of our team’s performance, significantly exceeding the high end of our guidance across all metrics, which is reflected in our strong full-year guidance raise,” said Bill McDermott, ServiceNow president and CEO.
“Business leaders worldwide are facing ‘do or die’ moments in a forever changed world. They are leveraging the flexibility of the Now Platform to create innovative digital solutions needed to solve the biggest challenges of our time. In partnership with our customers, we workflow a better world.”
The company says it now serves 1,201 customers with more than $1 million in contract value, representing an increase of 25% from a year ago.
On the guidance front, NOW is expecting Q3 revenue to come between $1.40 and $1.405 billion, suggesting growth of between 28% to 29%.
Jefferies analyst Samad Samana argues that the strong beat and raise could drive shares further higher. The analyst raised the price target to $675.00 per share from $625.00.
“We believe the runway for core ITSM is still significant despite the market share NOW has already gained with large enterprises. We expect NOW to continue to expand its non-IT ACV. In addition to momentum seen in its CSM and HR products, it released two new products Finance Operations Management (FOM) and DevOps in 2019, which should become material drivers over the medium term,” Samana wrote in a note sent to clients.
Needham & Company analyst Jack Andrews believes a strong Q2 from NOW should help “assuage previous growth concerns.” He also hiked the PT to $641.00 per share from $591.00 on the Buy-rated NOW.
“NOW reported strong 2Q21 results, beating consensus across multiple metrics. Despite the optics of decelerating growth heading into the quarter, NOW raised its FY21 guidance ahead of consensus for subscription revenue, which is now ahead of its original target issued in 4Q20 (and subsequently lowered due to FX). We believe NOW continues to benefit from strong secular trends which include accelerating spending on digital transformation projects and solutions that digitize manual workflows across disparate systems. These trends have become more evident as NOW's total pipeline growth for 2H21 has accelerated and deal cycles are shortening. We reiterate our BUY recommendation and believe that NOW represents one of the highest quality, large cap software stories,” Andrews said in a memo.
In addition to Jefferies and Needham, analysts at Cowen, Morgan Stanley, Canaccord Genuity, UBS, BofA, Stifel, Truist, Mizuho, RBC, also raised their price target on NOW.
Shares of the company are up 0.6% in pre-open Thursday.