Miscellaneous Photography
Service Today (NYSE: NOW) shares rose on Monday as investment firm Guggenheim upgraded the cloud computing software company, calling it a “distinctive asset and leading company” even in the face of a potential recession.
Analyst John DiFucci raised his ServiceNow rating (NOW) shares to buy from neutral, with a $510 price target, noting that business from the US federal government is likely to be “strong enough” to offset weakness from the commercial market in the third quarter, with expectations that this situation also plays out in the fourth quarter.
“We recognize the challenging macro environment, and ServiceNow has proven it is not immune,” DiFucci wrote in a note to clients, adding that there is a risk the company will not meet its long-term subscription revenue guidance.
“However, we believe ServiceNow has proven itself to be a unique asset and leading company with impressive returns [free cash flow] margins, an expanding product portfolio, and reliable customer base.”
ServiceNow (NOW) shares tacked on nearly 4% to $374.76 in premarket trading.
Last week, Morgan Stanley said “significant risk” has been priced into software stocks, including ServiceNow (NOW), among others.
Analysts are mostly positive on ServiceNow (NOW). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate a STRONG BUY. In contrast, Searching Alpha’s quant system, which continues to beat the market, is NOW rated a HANDLE.