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ServiceNow stock has upside to $549: MoffettNathanson

ServiceNow Inc (NYSE: NOW) is already up nearly 15% this morning on better-than-expected quarterly earnings. But a MoffettNathanson analyst says it’s only a preview of what’s in store moving forward.

ServiceNow stock could climb another 30%

On Thursday, Sterling Auty turned bullish on the stock and said it could rally further to $549. That represents another 30% upside from here.

Its earnings report, the analyst wrote, suggests the cloud company is outperforming in terms of managing currency headwinds as well as the rising rates.

ServiceNow is a welcome change after disappointing results from Microsoft and we expect them to help drive broader software higher. Management did a great job last quarter adjusting go-to-market execution in terms of pipeline management.

He dubbed ServiceNow stock a “new home” for the mega cap investors.

What ServiceNow expects for the future

In terms of outlook, ServiceNow did come in shy of the Street estimates. Nonetheless, forecast of a 23% annualised growth in subscription revenue this year was sufficient to please the investors. Auty added:

The tone is very positive for the remainder of the year and even 2023, and we expect shares to start outperforming.

ServiceNow is also popular on stock apps today as it continues to keep renewal rates around an exciting 98% and gross margins around 85%. Still down 35% for the year, ServiceNow stock is attractive in terms of valuation as well.

Nonetheless, it’s an interesting call considering the U.S. economy could be headed for a recession, as we reported earlier on Thursday. That tends to be a challenging environment for enterprise IT spend.

The post ServiceNow stock has upside to $549: MoffettNathanson appeared first on Invezz.

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