ServiceNow (NYSE:NOW) Stock Falls 2% - Should You Sell?

Key Points

• ServiceNow shares fell 2% to about $137.96 on lower-than-average trading volume, despite the stock remaining above its 50-day and 200-day moving averages.
• Analyst sentiment remains broadly positive: Deutsche Bank upgraded the stock to “Buy” with a $155 target, while the consensus rating is “Moderate Buy” with an average target of $147. ServiceNow also reported 24% year-over-year revenue growth and quarterly earnings that exceeded expectations.
• Valuation is the main risk. ServiceNow trades at a high price-to-earnings multiple of 86.22, and some analysts argue Salesforce offers better valuation and cash-generation prospects if ServiceNow’s growth or AI monetization slows.

ServiceNow, Inc. (NYSE:NOW - Get Free Report)'s stock price traded down 2% on Thursday. The stock traded as low as $137.53 and last traded at $137.9550. 7,932,859 shares traded hands during trading, a decline of 65% from the average session volume of 22,538,113 shares. The stock had previously closed at $140.78.

Key Headlines Impacting ServiceNow

Here are the key news stories impacting ServiceNow this week:

• Positive Sentiment: Deutsche Bank raised its price target from $135 to $155 and upgraded NOW to “Buy,” implying roughly 11% upside from the cited reference price. The upgrade reinforces investor confidence in ServiceNow’s growth outlook. Deutsche Bank raises ServiceNow price target
• Positive Sentiment: ServiceNow is reportedly gaining traction in replacing legacy CRM and workflow systems, with AI automation expanding its role across enterprise processes and supporting customer growth. ServiceNow expands legacy replacement push
• Positive Sentiment: Partner INRY deployed ServiceNow EmployeeWorks in six weeks and is beginning to roll the AI-enabled employee platform out to clients, offering evidence of adoption and implementation momentum. INRY deploys ServiceNow EmployeeWorks
• Positive Sentiment: Enterprise software stocks, including NOW, recently outperformed broader large-cap technology shares, suggesting continued investor interest in software and AI-related businesses even as Treasury yields remain elevated. Enterprise software stocks rally
• Neutral Sentiment: Several Zacks articles highlight unusually high investor attention and generally favorable Wall Street recommendations, but provide limited new company-specific information and caution that consensus ratings can be overly optimistic. ServiceNow investor attention
• Negative Sentiment: Valuation remains a risk: NOW trades at a high earnings multiple, while a comparison with Salesforce argues that Salesforce offers a more attractive valuation and stronger proven cash generation. This may limit upside if growth or AI monetization slows. Salesforce versus ServiceNow comparison

Wall Street Analysts Forecast Growth

Several brokerages have recently commented on NOW. TD Cowen reiterated a "buy" rating and issued a $140.00 target price on shares of ServiceNow in a report on Monday, August 17th. Truist Financial upped their price objective on shares of ServiceNow from $120.00 to $130.00 and gave the stock a "buy" rating in a research report on Thursday, July 9th. Morgan Stanley set a $180.00 price objective on shares of ServiceNow in a research note on Tuesday, July 21st. DA Davidson set a $170.00 target price on ServiceNow and gave the stock a "buy" rating in a research note on Monday, July 20th. Finally, Oppenheimer reaffirmed an "outperform" rating and issued a $140.00 target price (up from $130.00) on shares of ServiceNow in a report on Wednesday, July 15th. One analyst has rated the stock with a Strong Buy rating, thirty-six have issued a Buy rating, three have given a Hold rating and two have assigned a Sell rating to the company's stock. According to MarketBeat, the company currently has a consensus rating of "Moderate Buy" and an average price target of $147.00.

ServiceNow Trading Down 2.0%

The stock's 50 day simple moving average is $125.26 and its two-hundred day simple moving average is $110.61. The stock has a market capitalization of $142.65 billion, a PE ratio of 86.22, a PEG ratio of 2.52 and a beta of 0.97. The company has a debt-to-equity ratio of 0.43, a current ratio of 0.70 and a quick ratio of 0.70.

ServiceNow (NYSE:NOW - Get Free Report) last posted its quarterly earnings results on Wednesday, July 22nd. The information technology services provider reported $0.90 EPS for the quarter, topping analysts' consensus estimates of $0.86 by $0.04. ServiceNow had a net margin of 11.34% and a return on equity of 16.45%. The company had revenue of $3.99 billion for the quarter, compared to analysts' expectations of $3.93 billion. During the same quarter in the previous year, the firm posted $0.81 EPS. ServiceNow's revenue was up 24.0% on a year-over-year basis. On average, sell-side analysts expect that ServiceNow, Inc. will post 2.22 EPS for the current year.

Insider Transactions at ServiceNow

In related news, Director Paul Chamberlain sold 2,700 shares of ServiceNow stock in a transaction dated Thursday, August 27th. The stock was sold at an average price of $135.50, for a total value of $365,850.00. Following the completion of the sale, the director owned 43,990 shares of the company's stock, valued at approximately $5,960,645. This trade represents a 5.78% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, insider Jacqueline Canney sold 7,847 shares of the company's stock in a transaction that occurred on Friday, August 28th. The shares were sold at an average price of $138.00, for a total transaction of $1,082,886.00. Following the sale, the insider owned 30,042 shares in the company, valued at $4,145,796. The trade was a 20.71% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 14,081 shares of company stock worth $1,937,904. 0.34% of the stock is owned by company insiders.

Hedge Funds Weigh In On ServiceNow

Several hedge funds have recently bought and sold shares of NOW. QRG Capital Management Inc. lifted its stake in ServiceNow by 6.8% in the 2nd quarter. QRG Capital Management Inc. now owns 132,947 shares of the information technology services provider's stock worth $13,199,000 after purchasing an additional 8,486 shares in the last quarter. Envestnet Portfolio Solutions Inc. grew its position in shares of ServiceNow by 61.8% during the 2nd quarter. Envestnet Portfolio Solutions Inc. now owns 52,800 shares of the information technology services provider's stock valued at $5,242,000 after purchasing an additional 20,173 shares in the last quarter. State Street Corp increased its holdings in shares of ServiceNow by 2.0% in the second quarter. State Street Corp now owns 49,038,218 shares of the information technology services provider's stock worth $4,868,514,000 after purchasing an additional 979,726 shares during the period. National Pension Service raised its position in shares of ServiceNow by 5.8% in the second quarter. National Pension Service now owns 2,705,240 shares of the information technology services provider's stock worth $268,576,000 after buying an additional 147,467 shares in the last quarter. Finally, WINTON GROUP Ltd boosted its stake in ServiceNow by 45.9% during the second quarter. WINTON GROUP Ltd now owns 132,411 shares of the information technology services provider's stock valued at $13,146,000 after buying an additional 41,653 shares during the period. Hedge funds and other institutional investors own 87.18% of the company's stock.

ServiceNow Company Profile

ServiceNow, Inc is a cloud-based enterprise software company that provides digital workflow and automation solutions. Its Now Platform enables organizations to manage and connect business processes across information technology, customer service, human resources, finance, legal operations and other departments.

The company's products and services include IT service management, IT operations management, customer service management, human resources service delivery, security operations, risk and compliance management, strategic portfolio management and application development tools.

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