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TheStreet Open House

Robert W. Baird Upgrades ServiceNow to Outperform (Update)

Stock quotes in this article: NOW

Update (9:43 a.m.): Updated with Thursday market open information.

NEW YORK (TheStreet) -- Robert W. Baird upgraded ServiceNow  (NOW) to "outperform" from "neutral" and set a target price of $70. The firm cited the company's higher billing growth as the reason for the upgrade.

The stock was rising 18.66% to $68.35 shortly after the market opened on Thursday.

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Separately, TheStreet Ratings team rates SERVICENOW INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SERVICENOW INC (NOW) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been generally deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Software industry. The net income has decreased by 12.7% when compared to the same quarter one year ago, dropping from -$13.05 million to -$14.71 million.
  • SERVICENOW INC reported flat earnings per share in the most recent quarter. This year, the market expects an improvement in earnings (-$0.08 versus -$0.31).
  • Compared to other companies in the Software industry and the overall market, SERVICENOW INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SERVICENOW INC is rather high; currently it is at 68.58%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -13.22% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 128.26% to $20.72 million when compared to the same quarter last year. In addition, SERVICENOW INC has also vastly surpassed the industry average cash flow growth rate of -14.95%.
  • You can view the full analysis from the report here: NOW Ratings Report

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