ServiceNow (NYSE:NOW) Shares Gap Up Following Better-Than-Expected Earnings

ServiceNow, Inc. (NYSE:NOW)’s share price gapped up before the market opened on Thursday following a stronger than expected earnings report. The stock had previously closed at $95.46, but opened at $100.01. ServiceNow shares last traded at $97.0110, with a volume of 13,222,877 shares traded.

The information technology services provider reported $0.90 earnings per share for the quarter, beating the consensus estimate of $0.86 by $0.04. ServiceNow had a return on equity of 16.63% and a net margin of 11.34%.The company had revenue of $3.99 billion for the quarter, compared to analyst estimates of $3.93 billion. During the same period in the prior year, the company posted $0.81 EPS. The company’s revenue was up 24.0% compared to the same quarter last year.

ServiceNow News Summary

Here are the key news stories impacting ServiceNow this week:

• Positive Sentiment: ServiceNow beat Q2 earnings and revenue estimates, showing that demand for its workflow and AI products remains healthy.
• Positive Sentiment: The company raised its annual subscription revenue forecast again, which signals management confidence in continued growth.
• Positive Sentiment: AI-related momentum was a major highlight, with AI contract value topping $1 billion and multiple reports saying customers are adopting ServiceNow’s AI platform more aggressively.
• Positive Sentiment: Several analysts turned more constructive after earnings, including price-target increases and reaffirmed buy/overweight ratings.
• Neutral Sentiment: New partnerships and customer wins, including Experian, Leidos, TeamViewer, and Exclusive Networks, support the long-term platform story but are less likely to move the stock immediately. Article Title
• Negative Sentiment: Some investors remain worried that new AI tools from OpenAI and others could pressure legacy enterprise software, which has created volatility even after the earnings beat.

Analyst Ratings Changes

A number of brokerages have weighed in on NOW. Capital One Financial upped their price target on ServiceNow from $105.00 to $120.00 and gave the company an “overweight” rating in a research report on Tuesday, May 5th. Morgan Stanley set a $180.00 price objective on ServiceNow in a report on Tuesday. Weiss Ratings downgraded shares of ServiceNow from a “hold (c-)” rating to a “sell (d+)” rating in a research note on Friday, July 10th. UBS Group set a $248.00 target price on shares of ServiceNow in a report on Thursday. Finally, Mizuho dropped their target price on shares of ServiceNow from $150.00 to $140.00 and set an “outperform” rating for the company in a research report on Thursday, April 23rd. One analyst has rated the stock with a Strong Buy rating, thirty-six have issued a Buy rating, two have assigned a Hold rating and three have assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the company presently has a consensus rating of “Moderate Buy” and a consensus target price of $143.39.

Insider Buying and Selling at ServiceNow

In other news, Director Paul Edward Chamberlain sold 1,500 shares of the stock in a transaction on Thursday, May 14th. The stock was sold at an average price of $87.23, for a total transaction of $130,845.00. Following the sale, the director owned 44,930 shares in the company, valued at approximately $3,919,243.90. This represents a 3.23% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Paul Fipps sold 1,048 shares of the firm’s stock in a transaction on Monday, May 18th. The shares were sold at an average price of $98.51, for a total value of $103,238.48. Following the completion of the sale, the insider owned 12,072 shares of the company’s stock, valued at approximately $1,189,212.72. This trade represents a 7.99% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last quarter, insiders sold 19,144 shares of company stock worth $1,730,097. 0.34% of the stock is currently owned by insiders.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently added to or reduced their stakes in the stock. Vanguard Group Inc. grew its stake in shares of ServiceNow by 404.5% during the fourth quarter. Vanguard Group Inc. now owns 101,963,384 shares of the information technology services provider’s stock valued at $15,619,771,000 after purchasing an additional 81,752,460 shares during the last quarter. State Street Corp increased its holdings in shares of ServiceNow by 406.6% in the fourth quarter. State Street Corp now owns 47,896,597 shares of the information technology services provider’s stock valued at $7,337,280,000 after purchasing an additional 38,441,898 shares in the last quarter. Price T Rowe Associates Inc. MD raised its position in ServiceNow by 371.0% in the 4th quarter. Price T Rowe Associates Inc. MD now owns 32,395,663 shares of the information technology services provider’s stock worth $4,962,692,000 after purchasing an additional 25,517,218 shares during the last quarter. Geode Capital Management LLC raised its position in ServiceNow by 404.8% in the 4th quarter. Geode Capital Management LLC now owns 23,512,428 shares of the information technology services provider’s stock worth $3,591,425,000 after purchasing an additional 18,854,775 shares during the last quarter. Finally, Morgan Stanley lifted its holdings in ServiceNow by 335.6% during the 4th quarter. Morgan Stanley now owns 22,733,483 shares of the information technology services provider’s stock worth $3,482,543,000 after buying an additional 17,514,679 shares in the last quarter. Institutional investors and hedge funds own 87.18% of the company’s stock.

ServiceNow Stock Performance

The firm has a fifty day simple moving average of $104.70 and a 200-day simple moving average of $107.77. The company has a current ratio of 0.84, a quick ratio of 0.84 and a debt-to-equity ratio of 0.13. The stock has a market cap of $95.00 billion, a price-to-earnings ratio of 57.59, a P/E/G ratio of 1.60 and a beta of 0.96.

About ServiceNow

ServiceNow (NYSE: NOW) is a cloud computing company that builds enterprise software to manage digital workflows and automate business processes. Its offerings are designed to replace manual work and legacy systems with cloud-based, service-oriented applications that support IT operations, customer service, human resources, security response and other enterprise functions.

The company’s flagship product family is the Now Platform, a suite of subscription software and platform services that includes IT Service Management (ITSM), IT Operations Management (ITOM), IT Business Management (ITBM), Customer Service Management (CSM), HR Service Delivery, Security Operations and Asset Management.