ServiceNow Stock Is Paring Losses Thursday Morning: What's Going On?

ServiceNow Inc NOW shares are roaring back Thursday morning after the stock faced heavy selling pressure late Wednesday following the company's fourth-quarter financial results. Several analysts are out with positive updates following the print.

What Happened: ServiceNow reported fourth-quarter revenue of $1.94 billion, in line with average analyst estimates, according to Benzinga Pro. The company's top-line results were up 20% year-over-year. 

Subscription revenues came in at $1.86 billion, representing 22% growth year-over-year. The company said it saw a spike in new business during the fourth quarter. 

ServiceNow reported fourth-quarter earnings of $2.28 per share, which topped consensus estimates of $2.02 per share.

The company noted that its quarterly results were generated with a lower mix of early renewals from 2023, providing more opportunities to drive further expansion throughout the year.

"ServiceNow continues to perform as a beyond expectations company. Our Q4 surge in new business shows that the secular tailwinds of digitization aren't going anywhere," said Bill McDermott, chairman and CEO of ServiceNow.

ServiceNow said it expects first-quarter subscription revenues to be between $1.99 billion and $2 billion, representing 22% to 22.5% growth year-over-year. The company sees full-year 2023 subscription revenues in a range of $8.44 billion to $8.5 billion, representing 22.5% to 23.5% growth on a year-over-year basis.

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Analyst Assessment: Several analyst adjusted price targets on the stock following the company's quarterly results

• Piper Sandler analyst Rob Owens maintained ServiceNow with an Overweight and raised the price target from $500 to $525.
• JP Morgan analyst Mark Murphy maintained ServiceNow with an Overweight and raised the price target from $485 to $500.
• Wells Fargo analyst Michael Turrin maintained ServiceNow with an Overweight and raised the price target from $550 to $575.
• Barclays analyst Raimo Lenschow maintained ServiceNow with an Overweight and lowered the price target from $496 to $495.
• BMO Capital analyst Keith Bachman maintained ServiceNow with an Outperform and raised the price target from $475 to $500.
• Bernstein analyst Peter Weed maintained ServiceNow with an Outperform and lowered the price target from $641 to $586.

NOW Price Action: ServiceNow has a 52-week high of $621.41 and a 52-week low of $337.

The stock traded down more than 6% in Wednesday's after-hours session before paring some losses Thursday morning. The stock was down 0.84% at $445 at the time of writing, according to Benzinga Pro.

Photo: courtesy of ServiceNow.