Servicenow is a pure software as a service (SaaS) company. In particular, the SaaS industry is very popular after the rise in technology stocks, and valuations have indeed soared. It is about the digitization of work processes. The virtual agent is responsible for customer service. Only when they can no longer provide help, the customer will be referred to the service staff.
The business is developing rapidly. Following 2020 sales of 4.52 billion U.S. dollars, analysts expect sales this year to 5.75 billion U.S. dollars. By 2022, this number may exceed 7 billion U.S. dollars. Following 2019 earnings per share of US$4.63, earnings per share may reach US$7.00 in the next year. But even after the recent price adjustment from US$600 to the current around US$500, Servicenow’s share is still very expensive. P/E ratios are 17 and 14, respectively, and P/E ratios are 92 and 72 respectively.
| year | 2020 year | 2021e* | 2022e* |
| Sales (in billions of dollars) | 4,52 | 5,75 | 7,16 |
| Earnings per share (USD) | 4,63 | 5,46 | 7,04 |
| Profit growth | 17,93% | 28,94% | |
| KGV | 109 | 92 | 72 |
| I | 21,9 | 17,2 | 13,8 |
| Polyethylene glycol | 5,2 | 2,5 | |
| * e = expected |
Judging from the technical chart, the stock stabilized after the sell-off at the beginning of the month. However, from an annual perspective, there are still negative numbers so far. The $462.50 mark has withstood the seller three times in a row, and sales have been steadily declining. The closed bottom is not yet available. The area of USD 507.00 to USD 511.70 serves as a resistance zone. Only when the stock can clear the obstacle at $511.70 (the position where the EMA50 is about to reach) will the pendulum be beneficial to the bulls again. In this case, one can imagine the initial wave of recovery from US$562.40 to US$566.70. If the value can also overcome these obstacles, then the next target is an all-time high of $598.37.
However, below the aforementioned resistance zone near $510, the path of lower resistance points downward. Pro-cyclical short-term operations below $462.50 have become interesting.
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ServiceNow share
(© BörseGo AG 2021-Author: Bastian Galuschka, Associate Editor)
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