By Senad Karaahmetovic
ServiceNow (NYSE:NOW) stock trades about 1% lower today after Citi analysts cut the price target to $488 from $575 per share to reflect lowered estimates for FX and on a constant-currency basis.
Lowered estimates, which now also sit below consensus, are a result of “cautious” partner checks that suggest “deal slippage and decisions pushing into 2023+, particularly in Europe.”
“While tailwinds from slipped Q2 deals closing in Q3 should help evade a cRPO miss, and 3-year cRPO renewal dynamic could drive in-line Q4 guide/acceleration, we are expecting more muted upside,” they said in a client note.
Still, analysts reiterated a Buy rating and sees potential weakness as a buying opportunity as NOW stock remains “attractive on a medium to long-term basis with NOW leveraging their entrenched position within IT workflows driving efficiency gains across business functions.”
Moreover, the valuation is relatively attractive as NOW shares trade at “just 24.4x 2023E EV/FCF (3x turn premium to MSFT/CRM) despite superior organic growth (20%+ vs. low teens).”