ServiceNow Stock Is Soaring: What's Going On?

ServiceNow Inc (NYSE: NOW) shares are trading higher Thursday after the company reported better-than-expected earnings results.

ServiceNow said third-quarter revenue increased 21% year-over-year to $1.83 billion, which missed average analyst estimates of $1.85 billion, according to Benzinga Pro. The company said subscription revenues totaled $1.742 billion in the quarter, up 22% year-over-year.

ServiceNow reported quarterly earnings of $1.96 per share, which beat average estimates of $1.85 per share. 

"Q3's outperformance is a testament to the mission-critical nature of our platform and the strong execution of the ServiceNow team. We continue to see a robust pipeline and are maintaining our investments in growth hires as the opportunity in front of us remains enormous," said Gina Mastantuono, CFO of ServiceNow.

ServiceNow also announced that CEO Bill McDermott was named chairman of the company's board. Founder Fred Luddy, who has served as chairman for the past four-plus years, will remain a member of the board.

ServiceNow expects fourth-quarter subscription revenues to be between $1.834 billion and $1.839 billion, representing growth of 20% to 21% year-over-year.

Analyst Assessment:

• Morgan Stanley analyst Keith Weiss maintained ServiceNow with an Overweight rating and lowered the price target from $540 to $520.
• Credit Suisse analyst Phil Winslow maintained ServiceNow with an Outperform rating and lowered the price target from $650 to $600.
• BMO Capital analyst Keith Bachman maintained ServiceNow with an Outperform rating and raised the price target from $430 to $475.

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NOW Price Action: ServiceNow has a 52-week high of $651.41 and a 52-week low of $337.

The stock was up 14.1% at $418.36 at time of publication.

Photo: StockSnap from Pixabay.