© Reuters. ServiceNow (NOW) Stock Slips as Citi Cuts Price Target, Sees ‘Muted Upside’
By Senad Karaahmetovic
ServiceNow (NYSE: ) stock trades about 1% lower today after Citi analysts cut their price target to $488 from $575 per share to reflect lowered estimates for FX and ongoing monetary base.
The reduced estimates, which are now also below consensus, are a result of “cautious” partner reviews that suggest “deal slippage and decisions continuing into 2023+, particularly in Europe.”
“While tailwinds from slipped Q2 deal closings in Q3 should help avoid the cRPO miss, and the 3-year cRPO renewal dynamic could drive in-line Q4 guidance/acceleration, we expect more muted which is upside,” they said in a client note.
However, analysts reiterated a Buy rating and see potential weakness as a buying opportunity as NOW stock remains “attractive on a medium to long-term basis with NOW leveraging their entrenched position in within IT workflows that drive efficiency in business functions.”
Moreover, the valuation is quite attractive as NOW shares trade at “just 24.4x 2023E EV/FCF (3x turn premium to MSFT/CRM) despite superior organic growth (20%+ vs. low teens) .”