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ServiceNow: What can Investors Expect from Q2 Earnings?
Stock Analysis & Ideas

ServiceNow: What can Investors Expect from Q2 Earnings?

ServiceNow Inc. (NOW) cloud-based services have seen rapid adoption in recent times, due to the accelerated migration of workloads to the cloud by enterprises. The dramatic shift to remote work and online learning, essentially forced by the pandemic, has also significantly boosted the use of ServiceNow’s offerings.

This company will step up to the earnings plate this week (Wednesday, July 28) to deliver Q2’s financials.

Looking ahead to the release, Samad Samana of Jefferies expects ServiceNow to deliver strong results in Q2.

The five-star analyst believes that the company is set to benefit from the constant wave of technological innovation that forces businesses from all industries to adapt and spend in order to keep up. He further asserted that ServiceNow’s vital metrics like bookings and renewals have witnessed strong growth, indicating a healthy demand environment ahead. (See NOW stock charts on TipRanks)

Valuation Benefits Remain

Samana is of the opinion that the shares are undervalued, stating, “Shares have yet to fully recover to their peak valuation.”

The analyst reiterated a Buy rating on the stock with a price target of $625, suggesting a possible 12-month upside of 6.98%, and said, “The shares are poised to grind higher as NOW continues to deliver best-in-class growth at scale.”

The software company has gained 4% in the past five days and 34.7% over the past year.

Samana Offers Strong Q2 Projections

For Q2, the analyst expects ServiceNow to post subscription revenues of $1.294 billion, indicating a growth of 27% year-over-year, but remaining flat on a sequential basis. Furthermore, Samana expects the company to report subscription billings of $1.25 billion in Q2, reflecting a growth of 23% year-over-year.

Meanwhile, the Street estimate for subscription revenues and subscription billings are pegged at $1.295 billion and $1.26 billion, respectively.

As for guidance, ServiceNow expects Q2 subscription revenues to land in the range of $1.29-$1.295 billion and subscription billings to come in between $1.25-$1.255 billion.

Wall Street’s Take on NOW

On TipRanks, NOW has an analyst rating consensus of Strong Buy, based on 16 Buy ratings and 2 Hold ratings assigned in the last three months.

As for price targets, the average NOW price target is $618.65, reflecting a potential 12-month upside of 5.9% from current levels. 

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 analysis before making any investment.

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