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Service Today (NYSE: NOW) is getting some positive comments from Wall Street, as Piper Sandler upgraded the stock after the software company reported The “solid” fourth quarter results and the stock’s recent return give investors a chance to own the name.
Analyst Rob Owens raised his overweight rating, but maintained the $ 650 target price, after the company said it generated $ 1.61 billion in revenue and earned an adjusted $ 1.46 per share.
Owens noted that subscription charges have accelerated and significant deal strength was upheld in the quarter, but with continued digital innovation and strong IT spending for 2022, ServiceNow is poised to succeed.
“With digital transformation initiatives sustaining and IT spending outlook strong in 2022, we believe the company is well positioned to use significant tailwinds,” Owens wrote in a note to clients. “The initial outlook for ’22 provided further evidence of a strong demand environment with 28% CC guiding subscription growth flat to ’21 levels. Considering the strong tailwind supporting the business , we expect this to be fulfilled with continued implementation and increasing ’22 plays out, indicating potential revenue acceleration. “
ServiceNow (NOW) shares are rising in pre-market trading, gaining 11% to $ 537.70.
Owens added that ServiceNow (NOW) delivered strength across the platform and the guidance in the first quarter indicated subscription growth of approximately 25%, but that was hurt by 2.5% foreign exchange problems.
“The comment from the call and preliminary outlook for the coming year indicates strong trends for the business, with the possibility of sustaining growth across broader platforms, verticals and [geographies]”Owens explains.“ With a strong, long-term tailwind likely to buoy results and rising to a strong growth guide for the year, we believe investors should be opportunistic after the recent downturn in shares. “
Prior to the earnings, investment firm Macquarie said ServiceNow (NOW) was one of the best-positioned software-as-a-service stocks for 2022.