ServiceNow Shares Off After Analysts Comment on Guidance

ServiceNow shares slipped on Thursday after analysts reviewed the workflow-software provider's guidance.
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ServiceNow  (NOW) - Get Report shares fell after analysts commented about the third-quarter guidance that the workflow-software firm provided in Wednesday’s earnings report.

In its earnings statement, ServiceNow predicted third-quarter subscription billings would total $995 million to $1.015 billion. That compares with analysts’ average forecast of $1.01 billion, according to Bloomberg.

Citigroup analyst Walter Pritchard said that guidance may disappoint investors. 

“Into high expectations, [the second quarter] likely more than adequately cleared the bar, while the third-quarter guidance below [estimates] will likely worry some,” he wrote in a commentary cited by Bloomberg.

“With macro uncertainty and specifically Fed buying cycles holding some risk, investors will be looking to gauge whether this haircut is out of the ordinary.”

Kirk Materne, an analyst at Evercore ISI, offered similar thoughts.

“The company’s subscription billings guidance of 16% to 18% implies a fairly material deceleration from second-quarter levels (26%),” he wrote in a commentary cited by Bloomberg. 

“A slightly more conservative outlook was not factored into the stock with [the] shares at all-time highs heading into the print.”

ServiceNow shares recently traded at $424.85, down 4.7%. They have jumped 51% so far this year. And they have doubled from their 52-week low near $214, set in late October.

On the upside, Wells Fargo analyst Philip Winslow boosted his share-price target to $525 from $405, maintaining an overweight rating.

ServiceNow reported "strong" second-quarter results, with revenue, earnings per share, subscription billings, and free cash flow beating analyst forecasts, he said, according to The Fly.

Meanwhile, Canaccord analyst Richard Davis lifted his share-price target to $475 from $375, affirming his buy rating.