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ServiceNow Falls Despite Analyst Praise on Fundamentals

ServiceNow shares fell 7% Thursday after the workflow software company revised its full-year 2021 sales outlook lower.
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ServiceNow  (NOW) - Get ServiceNow, Inc. Report received largely positive commentary from analysts based on its fundamentals, even as the workflow software company’s shares fell Thursday.

The stock drop came after ServiceNow revised its full-year 2021 sales outlook lower in its first-quarter earnings report issued after the close Wednesday. But ServiceNow topped analysts’ forecasts for both revenue and adjusted profit for the quarter.

The company’s stock was sliding 6.8% to $519.35 on Thursday. It has dipped 6% in the past three months.

Morgan Stanley has an overweight rating and a $662 price target for ServiceNow.

The earnings report was “probably better than you thought,” as ServiceNow's adjusted subscription billings growth indicates “a broader solution portfolio driving solid underlying strength in the business,” the bank said, according to Bloomberg.

Morgan Stanley recommends buying ServiceNow shares on weakness.

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Oppenheimer has an outperform rating and a $610 target on the company.

First-quarter results and typically conservative guidance, “may not have lived up to high investor expectations, but highlights good execution and enterprise IT demand,” Oppenheimer said, according to Bloomberg.

BMO Capital Markets, meanwhile, has an outperform rating on the company, but cut its price target to $575 from $590.

While ServiceNow’s outlook is probably conservative, “with decelerating growth by most metrics, we don’t think that NOW is deserving of our top pick in large-cap,” BMO said in a commentary cited by Bloomberg. founder Jim Cramer recently spoke with ServiceNow Chief Executive Bill McDermott.

In the fourth quarter, ServiceNow reported revenue and adjusted profit that exceeded Wall Street's expectations, thanks to businesses turning digital and needing cloud computing.