ServiceNow Stock Faces Mixed Outlook Despite Strong EPS Results

ServiceNow's stock experiences volatility following a strong Q4 EPS of $3.67, yet weaker 2025 revenue guidance prompts concerns. Analysts maintain a consensus 'Strong Buy' rating as the company addresses macroeconomic uncertainties.

Date: 19-02-2025

AI Rating: 5

Earnings Per Share (EPS): ServiceNow reported adjusted EPS of $3.67 for Q4 2024, which was better-than-expected. This indicates that the company is generating significant earnings, enough to exceed analysts' estimates. However, concerns regarding future guidance have overshadowed this accomplishment.

Revenue Growth: The report mentions that ServiceNow projected 2025 subscription revenue of $12.6 billion - $12.7 billion, showcasing a slowdown from the previous year's growth of 22.5%. While current revenue figures indicate robust performance, the deceleration in expected growth has raised red flags for investors.

The mix of strong earnings and disappointing revenue guidance suggests volatility for ServiceNow's stock in the short term, as investors weigh short-term performance against long-term growth projections. Despite strong historical performance and a high renewal rate of 98%, investors remain cautious regarding future IT spending trends.

Analyst Ratings: A consensus rating of "Strong Buy" from 37 analysts, along with a majority indicating "Strong Buy," points toward overall confidence in ServiceNow's ability to navigate uncertainties. However, analysts like Morgan Stanley's Keith Weiss have recommended a "Hold" rating, suggesting caution amid fluctuating market conditions.

Overall, while ServiceNow has demonstrated strong earnings capabilities and a solid reputation among analysts, the weaker outlook for revenue growth could lead to adjustments in stock prices moving forward.

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