The shares of this cloud company were just initiated at MKM Partners with a “buy” rating and target of $90.
ServiceNow (NOW)
from Cabot Growth Investor
ServiceNow (NOW) looks a lot like the market so far this year: very choppy, with lots of ups and downs, though it has outperformed the market year-to-date. The stock has hung in there despite a big, earnings-induced hit in mid-April. The numbers were fine, but growth has been slowing a bit and the stronger U.S. dollar wasn’t helping. Throw in a lofty valuation and the sellers and buyers have been battling it out ever since.
So should you sell? I don’t think so, or at least not yet. Fundamentally, the firm remains in great shape; I don’t see much big-picture competition for its platform, and, notably, management remains committed to a long-term, 35%-ish annual growth outlook through 2020.
The bottom line is that the story and numbers continue to look good, so all I need to see is a better chart. A break below 70 or so would be bearish (and probably coincide with something amiss at the company), but renewed strength above 83 or so would be a strong buy signal.
Michael Cintolo, Cabot Growth Investor, www.cabot.net, 978-745-5532, July 1, 2015