Serve immediately (“Wide Moat”) has once again become an attractive stock after the recent sell-off that affected technology stocks. We believe that value is one of our best ideas at the moment.
ServiceNow provides software solutions to build and automate various business processes through “SaaS” (“software as a service”) delivery models. The company mainly focuses on IT functions for corporate customers.
ServiceNow started from IT Service Management (ITSM), developed within the scope of IT functions, and recently transferred its workflow automation logic to functional areas outside of IT, including customer service, human resource service delivery, and security operations.
ServiceNow also provides an application development as a service (PaaS) platform.
We believe that the company has been enjoying strong demand throughout the coronavirus pandemic, as service and automation solutions have become a top priority for companies trying to do business in new ways.
We believe that as the company accelerates the pace of digital transformation, these trends will continue in the next two years. We reiterate our fair value estimate of US$573 per share.
The strategy is well executed. The group is entering new application areas, most recently the financial function, which will become another pillar of medium-term growth.
We believe that ServiceNow, like other software vendors, is becoming an important partner in digital transformation, and as its customer retention statistics show, these customers remain at a high level.
The company should benefit from its strong and obvious growth in turnover, high levels and an increase in gross profit margin.
Compared with other companies that rely more on external growth for their development, all growth is generated internally, which represents the additional quality of the ServiceNow business model.
© Morningstar, 2021-The information contained in this document is for educational purposes only and is for reference only. It is not intended and should not be regarded as an invitation or encouragement to buy or sell the aforementioned securities. All reviews are the opinions of their authors and should not be regarded as personalized recommendations. The information in this document should not be the only source leading to investment decisions. Before making any investment decision, be sure to contact a financial advisor or financial professional.
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