Shares of ServiceNow (NOW) fell almost 4% in extended trading on Wednesday despite beating 2Q earnings estimates. Its dismal 3Q revenue outlook weighed on its stock. The company projects subscription revenues between $1.055 billion and $1.06 billion, which lags analysts’ estimate of $1.09 billion.
Nevertheless, its 2Q adjusted earnings of $1.27 per share beat analysts’ estimates of $1.01. Moreover, revenues grew 28% to $1.07 billion year-over-year and surpassed Street estimates of $1.05 billion. Rapid digital transformation due to the coronavirus outbreak cushioned its top and bottom-line.
Ahead of its earnings, on July 27, Needham analyst Jack Andrews lifted the price target to $481 (7.9% upside potential) from $440 and reaffirmed a Buy rating. He said that ServiceNow stands “well-positioned” to capitalize on accelerating digital transformations across large enterprises. On the same day, JMP Securities analyst Patrick Walravens also raised the price target to $460 (3.2% upside potential) from $350 and maintained a Buy.