Buy ServiceNow as the IT company outperforms peers, according to Bank of America. Analyst Brad Sills maintained a buy rating on ServiceNow, and called it a top pick, following checks with nearly a dozen of the software company’s partners that suggested “healthy, sustained demand.” “We maintain our Buy rating and consider NOW as a top pick, given our view that it is positioned to sustain best in class growth (mid 20s cc) amongst the large cap software group through a challenging environment,” Sills wrote Thursday. “Resilient growth is driven by incremental traction with newer employee and customer organizations, on demand for quick time to value and high ROI associated with ServiceNow’s workflow automation suite,” Sills added. ServiceNow shares are up more than 7% this year, after falling roughly 40% the year prior. The analyst’s $500 price target suggests the stock can jump another 20% from Wednesday’s closing price. The stock is up slightly in the premarket Thursday. ServiceNow CEO Bill McDermott made positive comments Wednesday on CNBC, saying there’s “not a chance” for a recession in IT spending. Meanwhile, the analyst said he expects ServiceNow will lead the digital transformation for back office workflow automation, as it grows in the next several years. “[Given] the size of the market that ServiceNow is addressing ($65bn+ combined ITOM/ITSM and custom workflow apps market) and only ~9% penetration today, we believe 25%+ current bookings/cRPO growth is sustainable in the coming 3-5 yrs,” read the note. —CNBC’s Michael Bloom contributed to this report.
