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ServiceNow, Inc. (NOW) underperformed the S&P 500, seeing a loss of roughly 3.8% compared to the S&P 500’s loss of around 0.8% over the past year. Amidst market volatility, hedge funds actively sold ServiceNow’s shares, though the stock rose on the WhaleWisdom Heatmap to 14 from 16.

ServiceNow is a software as a service (SaaS) company specializing in enterprise cloud computing solutions and technical management support. The company offers a cloud computing platform to manage digital workflows for enterprise operations. The company supports customers within security, operations, human resources, customer service, and other business areas. Users can manage information technology projects, teams, and customer interactions through their applications and analyze data for trends and decision-making while protecting data through a network encryption system. Despite recent market fluctuations, ServiceNow’s performance tools continue to be widespread across industries.

Mixed Actions from Hedge Funds and Institutions

ServiceNow’s saw hedge funds selling in the fourth quarter, with the aggregate 13F shares held by hedge funds lowered to about 41.79 million from 41.81 million, a change of approximately 0.1%. Of the hedge funds, 40 created new positions, 106 added, 34 exited, and 106 reduced their holdings. In contrast to hedge funds, institutions were buying and increased their aggregate holdings by about 1.7% to approximately 174.0 million from 171.2 million.


Positive Earnings Estimates

Analysts expect to see earnings increase in 2022 and 2023, bringing earnings per share to $9.36 by December 2023, up from an estimated $7.34 for December 2022. Estimates are also optimistic for revenue, with an anticipated rise by the end of 2022 to approximately $7.4 billion; this momentum may continue into 2023, with revenue estimated at $9.3 billion by December 2023. ServiceNow’s 13F metrics show a slight dip in stock value in 2022, compared to almost a decade of gradual revenue growth.


Analysts React Conservatively to Q1 Report

Many analysts shared Outperform ratings after first-quarter earnings were announced. Reports of increased subscription revenue and the importance of digital business in today’s world are encouraging for ServiceNow. However, the software development industry has seen market fluctuations in recent months. Keith Bachman of BMO Capital Markets raised the firm’s price target on ServiceNow to $595 from $570, maintaining an Outperform rating on shares. Oppenheimer analyst Ray McDonough lowered the firm’s price target on ServiceNow to $600 from $660, keeping an Outperform rating on shares. Despite market volatility, McDonough sees positive demand for ServiceNow’s software. Morgan Stanley’s Keith Weiss lowered the firm’s price target to $745 from $810, factoring in higher interest rates. Weiss also shared that ServiceNow offers the opportunity of a good entry point into a “premier software growth enterprise.” Phil Winslow of Credit Suisse kept an Outperform rating on shares and set a price target of $700 for ServiceNow, lowered from $800 following recent quarterly results.

Favorable Long-term Outlook

ServiceNow has demonstrated a positive long-term trend over the past nine years. While hedge funds were selling in this volatile market and ServiceNow saw slower growth, analysts saw demand for the company’s software continuing. Optimistic earnings and revenue estimates from analysts also offer encouragement to patient investors.

This entry was posted on Monday, May 2nd, 2022 at 8:56 am and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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