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Shares of ServiceNow (NOW) - Get Free Report plunged Wednesday after Morgan Stanley downgraded the fast-growing software firm to equal weight from overweight.

The Santa Clara, Calif., company's stock price dropped 6.29% to $256.99.

Analyst Keith Weiss said upside to Morgan Stanley's price target of $267 a share was "limited," even after a 10% pullback since July following a 60% runup, Bloomberg reported.

The report cited "increasing near-term risks" to the stock price of the maker of IT-management software with an emphasis on digital workflow tools for employees.

A potential drag on margins is ServiceNow's ramped-up spending on research and development, Morgan Stanley noted. The firm added that the software company remains a "a best-in-class software asset."