ServiceNow stock rises to $549: MoffettNathanson

ServiceNow Inc (NYSE: NOW ) is already up nearly 15% this morning on better-than-expected quarterly earnings. But a MoffettNathanson analyst said this is just a preview of what’s in store moving forward.

ServiceNow stock could climb another 30%

On Thursday, Sterling Auty was bullish on the stock and said it could still rally to $549. That represents another 30% upside from here.

Its earnings report, the analyst wrote, suggests the cloud company is faring better in terms of managing currency headwinds as well as rising rates.

ServiceNow is a welcome change after the disappointing results from Microsoft and we hope they help elevate the wider software. Management did a good job last quarter in fine-tuning go-to-market execution in terms of pipeline management.

He called ServiceNow stock a “new home” for large investors.

What does ServiceNow expect for the future?

In terms of outlook, ServiceNow came in shy of Street estimates. However, a forecast of 23% annual growth in subscription revenue this year is enough to satisfy investors. Auty added:

The tone is very positive for the rest of the year and even into 2023, and we expect shares to start outperforming.

ServiceNow is also popular among stock apps today as it continues to maintain renewal rates around an exciting 98% and gross margins around 85%. Still down 35% for the year, ServiceNow stock is also attractive in terms of valuation.

Still, it’s an interesting call considering the US economy could be heading into a recession, as we reported earlier on Thursday. That tends to be a challenging environment for enterprise IT spending.

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