Acquisitions have played a critical role in ServiceNow’s (NOW) growth over the years, helping the company strengthen its security, ITOM (IT Operations Management), and AI and predictive modeling capabilities. As observed from its last earnings release, the company has a cash balance of around $1.5 billion, which positions it comfortably to pursue strategic acquisitions.
As of now, ServiceNow, a dominant name in the IT service market, seems to be binging on acquisitions. The company announced a fresh buyout on Wednesday, August 11, marking the fourth acquisition so far this year.
Notably, ServiceNow has inked a deal to acquire indoor mapping tool provider Mapwize for an undisclosed amount. This announcement comes hot on the heels of last week’s acquisition announcement of database performance company Swarm64. ServiceNow acquired Lightstep and Intellibot earlier this year. (See ServiceNow stock chart on TipRanks)
Needham’s Observations
Following the announcement, Needham analysts led by Jack Andrews made a few key observations on the prospects of the Mapwize acquisition, which is likely to close in the third quarter of this year.
Andrews expects the integration of Mapwize into ServiceNow’s workplace management platform to empower customers to create maps of their businesses or realty assets and reserve resources.
He noted, “The technology will integrate with NOW’s Workplace Reservation Management, Workplace Space Management, and Workplace Visitor Management for an end-to-end platform to create a layout of physical spaces and eventually reserve them. We believe the platform will better enable customers to manage, reserve, and utilize physical assets as work becomes more hybrid long-term.”
The analyst also believes the deal to be primarily technology-driven and should not meaningfully alter results.
“We believe the acquisition may be immaterial to results, the deal should bring greater leverage to hybrid work trends as customers now have an end-to-end platform for mapping, managing, and reserving physical assets,” Andrews added.
Notably, ServiceNow’s solutions are pivotal to the digital transformation and software stack initiatives of most enterprises all over the world. The analyst believes that the company is firing on all cylinders, including customers, seats, platform, and products.
With this, Andrews assigned a Buy rating to the stock and a price target of $641, implying 12.4% upside potential.
Wall Street’s Take
Consensus among analysts for ServiceNow is a Strong Buy based on 19 Buys and 2 Holds. The average ServiceNow price target of $653.5 implies 14.6% upside potential.
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
