ServiceNow Components (NYSE: NOW) dropped 12.7% on Wednesday to close at $ 427.94 after cloud-based platform company’s CEO Bill McDermott told CNBC’s Mad Money host Jim Cramer, that among other macro headwinds, the growing The US dollar could be a strong headwind for technology companies.
Let’s see if the rising US dollar could pose a threat to ServiceNow’s growth.
McDermott further commented on the strong US dollar, “You can now see the headwind of the dollar against well -known technology brands. No one is worth more than currency right now. ”
McDermott briefly said, “Not in a good mood.”
Strong Demand For ServiceNow Platform Amidst Change
Last month, as ServiceNow CFO Gina Mastantuono acknowledged the macro headwinds in a chat with Mizuho Securities analyst Gregg Moskowitz, she reiterated that “demand for the ServiceNow platform remains strong.”
Mastantuono added that “digital innovation initiatives continue to deliver many growth opportunities for its business.”
Although currency headwinds have continued to worsen in recent months, Mastantuono said he remained “confident in the co. ‘S projections for 2Q.”
ServiceNow expects subscription revenues in Q2 to range from $ 1.67 billion to $ 1.675 billion, likely to grow 26% year-on-year.
The Impact Solution of ServiceNow and the New Release of San Diego
Mastantuono is also excited about ServiceNow’s Impact solution, a “personalized service that can accelerate digital transformation by combining AI-powered recommendations, expert guidance, and premium technology support.”
The CFO pointed out that the Impact solution exceeded the company’s own expectations and NOW closed more than 100 transactions in the quarter. Mastantuono hopes that “ServiceNow Impact will help drive greater consumption of its platform over time,” and noted that “transactions involving ServiceNow Impact are driving an increase in ACV [annual contract value]. ”
Mastantuono also told analyst Moskowitz that San Diego’s latest Now platform release of ServiceNow is “so far its most innovative release” and “generated the highest percentage of platform upgrades in the early stages. “
Given the strong demand for NOW products and its competitive positioning, analyst Moskowitz expects “continued high growth over the next few years” for ServiceNow, ”which should be helped by strong demand for workflow automation, strong cross-sell opportunities, and greater penetration of newer markets. ”
As a result, the analyst repeated a Buy rating and a target price of $ 550 on the stock. The analyst’s price target is the lowest on the Street and indicates a potential increase of 28.5% to current levels.
Other analysts on the Street also sided with Moskowitz and continued to be bullish about ServiceNow with a Strong Buy consensus rating based on 22 Buys and a Hold. NOW’s average price target of $ 632.75 indicates a potential increase of 47.8% over current levels.
Bottom Line
While ServiceNow continues to struggle with macro headwinds, the company seems poised for long -term growth. Even TipRanks investors are very positive about the stock as indicated by the TipRanks Crowd Wisdom tool.
This tool states that 26.6% of top-performing portfolios on TipRanks have increased their stock holdings in the past 30 days.
Disclaimer