ServiceNow’s Contract Wins Drive 4Q Profit Beat; Shares Rise Pre-Market

ServiceNow logged double-digit revenue and earnings growth in 4Q, thanks to several big contract wins during the quarter. Shares of the enterprise software maker increased 2.6% in Thursday’s pre-market trading session.

ServiceNow’s (NOW) 4Q earnings of $1.17 per share increased 21.9% year-over-year and exceeded analysts’ expectations of $1.06 per share. The company’s 4Q non-GAAP revenue grew 29% to $1.23 billion year-over-year and came marginally higher than the consensus estimates of $1.21 billion.

The company closed 89 new deals, which translated into more than $1 million in annual contract value (ACV) during the quarter. At the end of 2020, ServiceNow had a total 1,093 customers with ACV of more than $1 million, reflecting a year-over-year increase of 23%. (See NOW stock analysis on TipRanks)

On Jan. 28, Oppenheimer analyst Brian Schwartz raised the stock’s price target to $610 (18.1% upside potential) from $600 and reiterated a Buy rating. In a note to investors, Schwartz wrote, “We see another year of share appreciation from consistent beat-and-raise quarters and higher estimates driven by inflecting enterprise demand for modernizing IT workflows and business transformations.”

The Street has a bullish outlook on stock, with the consensus of a Strong Buy based on 20 Buys versus only 1 Hold. The average analyst price target of $605.24 implies upside potential of about 17.2% to current levels. Shares have gained by about 67.9% in one year.

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