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Service Today (NYSE: NOW) shares fell as much as 11% on Tuesday as investors reacted negatively to some comments about the cloud-software company’s business from Chief Executive Bill McDermott.
On a TV show on CNBC late Monday, McDermott spoke cautiously about larger economic issues such as rising interest rates, the strength of the U.S. dollar, rising energy costs and the ongoing war between Ukraine and Russia. McDermott suggested that combining such factors causes some customers to reconsider spending priorities and look more at products that deliver faster returns on their investments.
Analyst Brad Reback, of Stifel, said the things McDermott said are likely not just an issue with ServiceNow (NOW), but “likely to be felt throughout [software] group ”and he expects to see“ downward estimates of changes ”from some software companies in the coming weeks.
ServiceNow (NOW) is scheduled to report its second quarter results on July 27. Wall Street analysts currently estimate ServiceNow (NOW) will report a profit of $ 1.56 per share on $ 1.77B revenue for the period ended in June.
Both of those analysts currently have a consensus strong buy rating on ServiceNow’s (NOW) shares, while Seeking Alpha authors have a hold rating on the company’s stock. Alpha’s search quant system, which continues to outperform the market, has a hold rating on shares of ServiceNow (NOW).