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ServiceNow Stock and Why It Fell 4.5% Yesterday

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Nov. 20 2020, Updated 3:30 p.m. ET

NOW stock

ServiceNow (NOW) stock fell 4.5% on Thursday, October 4, and closed at $187.44. It’s currently trading 66% above its 52-week low of $112.84 and 9% below its 52-week high of $206.30.

The stock has risen 44% in 2018 and 59% in the last 12 months. It has gained 151% in the last three years and 270% in the last five years.

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Will revenue growth continue to drive the stock?

We’ve seen recently that ServiceNow’s revenue is estimated to rise 34.6% in 2018 and 29% in 2019. Its earnings are expected to rise 96% in 2018, 35% in 2019, and 52% over the next five years.

ServiceNow operates in a high-growth business segment, the SaaS (software as a service) vertical in cloud computing. Global SaaS was estimated at $74.8 billion, with cloud SaaS accounting for 67% of total sales.

The digital transformation over the last few years has provided ample opportunity for ServiceNow to significantly increase its sales. It has a cloud-based software subscription model that ensures a strong stream of recurring revenues.

Average price target of $209.11

There are 34 analysts covering ServiceNow. Thirty of them have recommended a “buy,” four have recommended a “hold,” and none have recommended a “sell.” The average 12-month target estimate for the stock is $209.11. That indicates that ServiceNow is trading at a discount of 12% to analysts’ target estimate.

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