ServiceNow: Defensive Software Business Positioned For Long-Term Organic Growth

Oct. 21, 2022 12:58 AM ETServiceNow, Inc. (NOW)2 Comments


  • ServiceNow has a relatively defensive core ITSM business that remains resilient in volatile and uncertain economic times, while it continues to have solid growth potential in new emerging workflows.
  • Management has reiterated their focus on an organic growth strategy in the long term, with its new workflows driving future growth and gaining market share.
  • The weakening macroeconomic environment brings opportunities for ServiceNow as customers realise the importance of automation and doing more with less to drive their organisations forward.
  • 3Q22 results are de-risked, in my view, as management has incorporated further potential for deal delays into the guidance and expectations have come down given the uncertain macroeconomic environment.
  • My 1-year target price for ServiceNow is $520, representing 46% upside from current levels.
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Investment thesis

I think that ServiceNow (NYSE:NOW) is well positioned in the current macroeconomic environment as we are likely to see the benefits of its relatively defensive business compared to other parts of software. As elaborated in my earlier article

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Disclosure: I/we have a beneficial long position in the shares of NOW either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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