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ServiceNow Inc NOW

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Morningstar’s Analysis

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ServiceNow on Autopilot as It Delivers Another Strong Quarter; FVE Up to $685

Dan Romanoff, CPA Senior Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

We are raising our fair value estimate to $685 per share, from $630 previously, based on continued beat and raise performance from wide-moat ServiceNow. We see some upside to shares, especially given a modest pullback in afterhours trading. We continue to favor the name for its long-term organic-driven growth as it continues to leverage its strength in workflow automation to penetrate existing customers more deeply in IT and more broadly with human resources and customer service-specific products. ServiceNow delivered strong results, including upside to revenue, remaining performance obligation, or RPO growth, and adjusted operating margin. We think fourth-quarter guidance is solid, although foreign exchange rates optically limit upside. In our view, the quarterly results reinforce our view that ServiceNow is benefitting from digital transformation efforts which are being pulled forward, as corporate IT infrastructures have often been exposed as insufficient in the current remote work environment.

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Company Profile

Business Description

ServiceNow Inc provides software solutions to structure and automate various business processes via a SaaS delivery model. The company primarily focuses on the IT function for enterprise customers. ServiceNow began with IT service management (ITSM), expanded within the IT function, and more recently directed its workflow automation logic to functional areas beyond IT, notably customer service, HR service delivery, and security operations. ServiceNow also offers an application development platform as a service (PaaS).

2225 Lawson Lane
Santa Clara, CA, 95054
T +1 408 501-8550
Sector Technology
Industry Software - Application
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Speculative Growth
Employees 13,096