What Happened?
Shares of enterprise workflow automation company ServiceNow (NYSE: NOW) jumped 3.7% in the afternoon session after the company's partners announced new investments and product launches leveraging its platform, amid a broader market rally. Apar Technologies, a global consulting firm, announced a strategic investment in Medeon, a company specializing in ServiceNow AI consulting and solutions. In separate news, DXC launched its Assure Smart Apps for the insurance industry, a product enhanced by a partnership with ServiceNow for its workflow technology. The stock's rise was also supported by a general market upswing, as U.S. stocks rallied after President Donald Trump downplayed the possibility of new tariffs on Chinese imports, easing investor concerns.
The shares closed the day at $923.84, up 3.9% from previous close.
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What Is The Market Telling Us
ServiceNow’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 1.5% on the news that Morgan Stanley upgraded the stock to Overweight from Equal Weight, citing that perceived risks were exaggerated. The firm raised its price target on the shares to $1,250 from $1,040. In a research note, the analyst stated that the company's consistent performance had been overshadowed by concerns related to generative artificial intelligence and federal spending. However, Morgan Stanley expressed confidence that ServiceNow was well-positioned to meet its targets, projecting a 20% increase in subscriptions and over 20% growth in free cash flow through fiscal 2027. The firm believed the company could deliver on its generative AI capabilities, creating an attractive opportunity for investors.
ServiceNow is down 12% since the beginning of the year, and at $927.77 per share, it is trading 20.7% below its 52-week high of $1,170 from January 2025. Investors who bought $1,000 worth of ServiceNow’s shares 5 years ago would now be looking at an investment worth $1,790.
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