NEW YORK (TheStreet) -- ServiceNow (NOW) - Get ServiceNow, Inc. Report stock is up in early market trading on Thursday after Pacific Crest increased their price target to $82 from $75 and maintained an "outperform" rating.
"We continue to believe ServiceNow is a top enterprise stock to own," Pacific Crest said. ServiceNow continued to demonstrate impressive momentum with strength in large deals, increased penetration into the Fortune 500, strong large-deal metrics and traction with new solutions, analysts noted.
During the first quarter, ServiceNow has added 49 Global 2000 customers. In its fourth quarter of 2014, the company added 211 new customers. Its total customer count now stands at 2,725.
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During the fourth quarter, the total number of customers paying the company over $1 million in all-commodity volume increased 93% year over year, demonstrating the success.
Pacific Crest anticipates a revenue growth of 46.5% to $1 billion from $682.6 million.
ServiceNow is a provider of cloud-based services to automate enterprise information technology (IT) operations.
SeparatelyTheStreet 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 some concerns, 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk and feeble growth in its earnings per share."
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 when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 179.0% when compared to the same quarter one year ago, falling from -$14.71 million to -$41.05 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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 debt-to-equity ratio of 1.05 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, NOW has managed to keep a strong quick ratio of 1.81, which demonstrates the ability to cover short-term cash needs.
- SERVICENOW INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SERVICENOW INC reported poor results of -$0.54 versus -$0.31 in the prior year. This year, the market expects an improvement in earnings (-$0.09 versus -$0.54).
- Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: NOW Ratings Report