ServiceNow (NYSE:NOW) Shares Down 6% - Should You Sell?

Key Points

• ServiceNow shares fell 6% in mid-day trading, dropping to around $95.20 after previously closing at $101.33, with trading volume running well above average.
• Despite the pullback, Wall Street sentiment remains constructive: analysts rate the stock a Moderate Buy overall, with a consensus target price of $142.17, though several firms recently cut their price objectives.
• ServiceNow’s latest results showed solid growth, as revenue rose 22.1% year over year to $3.77 billion and EPS matched expectations at $0.97, while insider sales and a lower share price may be adding pressure to the stock.

ServiceNow, Inc. (NYSE:NOW - Get Free Report)'s stock price was down 6% during mid-day trading on Wednesday . The stock traded as low as $95.09 and last traded at $95.20. Approximately 31,735,818 shares changed hands during mid-day trading, an increase of 32% from the average daily volume of 24,047,762 shares. The stock had previously closed at $101.33.

Wall Street Analysts Forecast Growth

A number of research firms have recently issued reports on NOW. Deutsche Bank Aktiengesellschaft dropped their price objective on shares of ServiceNow from $180.00 to $135.00 and set a "buy" rating on the stock in a research note on Thursday, April 16th. Needham & Company LLC reiterated a "buy" rating and set a $115.00 price objective on shares of ServiceNow in a research note on Tuesday, May 5th. Morgan Stanley dropped their price objective on shares of ServiceNow from $210.00 to $180.00 and set an "overweight" rating on the stock in a research note on Thursday, April 23rd. Oppenheimer reiterated an "outperform" rating on shares of ServiceNow in a research note on Tuesday, May 26th. Finally, FBN Securities dropped their price objective on shares of ServiceNow from $160.00 to $120.00 in a research note on Thursday, April 23rd. One equities research analyst has rated the stock with a Strong Buy rating, thirty-five have assigned a Buy rating, five have assigned a Hold rating and one has given a Sell rating to the company. According to MarketBeat.com, ServiceNow currently has an average rating of "Moderate Buy" and a consensus target price of $142.17.

ServiceNow Price Performance

The company has a quick ratio of 0.84, a current ratio of 0.84 and a debt-to-equity ratio of 0.13. The company has a market capitalization of $98.15 billion, a P/E ratio of 56.73, a PEG ratio of 1.72 and a beta of 0.94. The business has a 50 day simple moving average of $99.84 and a 200-day simple moving average of $118.90.

ServiceNow (NYSE:NOW - Get Free Report) last posted its earnings results on Wednesday, April 22nd. The information technology services provider reported $0.97 earnings per share (EPS) for the quarter, meeting analysts' consensus estimates of $0.97. The company had revenue of $3.77 billion for the quarter, compared to analysts' expectations of $3.75 billion. ServiceNow had a return on equity of 18.16% and a net margin of 12.59%.The firm's quarterly revenue was up 22.1% compared to the same quarter last year. During the same period last year, the business posted $0.81 earnings per share. Analysts predict that ServiceNow, Inc. will post 2.35 EPS for the current fiscal year.

Insider Buying and Selling

In related news, insider Paul Fipps sold 1,048 shares of ServiceNow stock in a transaction dated Monday, May 18th. The shares were sold at an average price of $98.51, for a total transaction of $103,238.48. Following the sale, the insider directly owned 12,072 shares in the company, valued at $1,189,212.72. The trade was a 7.99% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, Director Paul Edward Chamberlain sold 1,500 shares of ServiceNow stock in a transaction dated Thursday, May 14th. The shares were sold at an average price of $87.23, for a total transaction of $130,845.00. Following the sale, the director owned 44,930 shares in the company, valued at approximately $3,919,243.90. This represents a 3.23% 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. Over the last ninety days, insiders have sold 28,071 shares of company stock valued at $2,529,956. 0.34% of the stock is owned by corporate insiders.

Institutional Investors Weigh In On ServiceNow

A number of hedge funds and other institutional investors have recently modified their holdings of NOW. Norges Bank bought a new stake in ServiceNow in the fourth quarter valued at $2,020,992,000. World Investment Advisors grew its position in ServiceNow by 411.7% in the fourth quarter. World Investment Advisors now owns 47,955 shares of the information technology services provider's stock valued at $7,346,000 after acquiring an additional 38,583 shares during the period. Cohen Klingenstein LLC grew its position in ServiceNow by 400.0% in the fourth quarter. Cohen Klingenstein LLC now owns 10,000 shares of the information technology services provider's stock valued at $1,532,000 after acquiring an additional 8,000 shares during the period. Moors & Cabot Inc. grew its position in ServiceNow by 387.7% in the fourth quarter. Moors & Cabot Inc. now owns 45,630 shares of the information technology services provider's stock valued at $6,990,000 after acquiring an additional 36,274 shares during the period. Finally, Sumitomo Mitsui Trust Group Inc. grew its position in ServiceNow by 385.9% in the fourth quarter. Sumitomo Mitsui Trust Group Inc. now owns 2,599,397 shares of the information technology services provider's stock valued at $398,202,000 after acquiring an additional 2,064,440 shares during the period. 87.18% of the stock is currently owned by institutional investors.

About ServiceNow

ServiceNow NYSE: NOW is a cloud computing company that builds enterprise software to manage digital workflows and automate business processes. Its offerings are designed to replace manual work and legacy systems with cloud-based, service-oriented applications that support IT operations, customer service, human resources, security response and other enterprise functions.

The company's flagship product family is the Now Platform, a suite of subscription software and platform services that includes IT Service Management (ITSM), IT Operations Management (ITOM), IT Business Management (ITBM), Customer Service Management (CSM), HR Service Delivery, Security Operations and Asset Management.

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