It’s no secret that the five largest U.S. tech stocks had a historic June quarter. While most brokerages have positive views on Alphabet, Amazon, Apple, Facebook and Microsoft, there are still a few holdouts.
That’s not the case with workflow automation company ServiceNow Inc. (NYSE: NOW). After the company reported second-quarter results after markets closed Wednesday, it didn’t take long for 12 brokerages to reiterate their Buy ratings on the stock and for all 12 to raise their price targets.
Shortly after the markets opened Wednesday, ServiceNow’s stock had added more than 2% to its share price and traded within a couple of dollars of its 52-week high. The company reported a 31% year-over-year increase in subscription revenue and 1,201 customers with annual contracts valued at $1 million or more, up 25% year over year.
That guaranteed income stream is a river of gold for ServiceNow. Here are a few comments from brokerages that had reiterated their Buy-equivalent ratings on the stock, along with price target increases from all 10. As of Wednesday’s close, the 12-month price target was $610.68.
Cowen reiterated its Outperform rating and raised its price target from $620 to $670. The firm noted the ServiceNow raised its operating margin guidance from 22% to 23% and guided full fiscal year subscription revenue growth at 29% and full-year billings growth to 27%.
Jefferies reiterated its Buy rating on the stock and raised the price target from $625 to $675. The analysts acknowledge the stock’s recent share price increases and conclude that the strong beat on consensus estimates and raised guidance can drive the stock even higher.
KeyBanc reiterated its Overweight rating and raised its price target from $660 to $718. The firm’s confidence was lifted by ServiceNow’s “accelerated pipeline growth.”
Needham reiterated its Buy rating on the stock and raised its price target from $591 to $641. The analysts cited long-term trends included more corporate spending on digital transformation and higher adoption of digital workflows to replace manual systems. ServiceNow’s pipeline growth indicates that the transformation process has speeded up.
Here are the rest of the ratings and price target changes:
| Brokerage | Rating Action | Price Target |
|---|---|---|
| Morgan Stanley | Reiterated Overweight | $662 » $700 |
| RBC Capital Markets | Reiterated Outperform | $640 » $670 |
| Mizuho | Reiterated Buy | $640 » $650 |
| Truist Securities | Reiterated Buy | $575 » $640 |
| Stifel | Reiterated Buy | $600 » $650 |
| BofA Securities | Reiterated Buy | $680 » $700 |
| UBS | Reiterated Buy | $625 » $650 |
| Canaccord Genuity | Reiterated Buy | $600 » $650 |
After an hour of trading Thursday morning, ServiceNow’s stock traded up about 2.3% to $596.65. The 52-week trading range is $418.53 to $608.30, with that high set Thursday morning.
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