ServiceNow (NOW)'s Decline is Overdone, Says Jim Cramer

We recently published Jim Cramer Discussed These 12 Stocks & Wondered Whether He Should Melt Silver.  ServiceNow, Inc. (NYSE:NOW) is one of the stocks that Jim Cramer discussed.

Software-as-a-service firm ServiceNow, Inc. (NYSE:NOW)’s shares are down by an unbelievable 45.9% over the past year and by 25% year-to-date. In his previous comments about the firm, Cramer has praised its CEO. ServiceNow, Inc. (NYSE:NOW)’s latest earnings report saw the firm report $3.5 billion in fourth-quarter revenue and $0.92 in adjusted profit per share. Both of these beat analyst estimates of $3.57 billion and $0.88. Crucially, ServiceNow, Inc. (NYSE:NOW) also forecast $3.65 billion to $3.66 billion in its first quarter revenue, which was higher than estimates of $3.57 billion. Following the earnings, Bernstein reiterated an Outperform rating and a $219 share price target for the company. The financial firm pointed out that ServiceNow, Inc. (NYSE:NOW) was cheap when compared to its peers in the software industry. However, Stifel reduced the share price target to $180 from $200 and kept a Buy rating. Stifel pointed out that for the software company’s shares to re-rate, they would have to experience a shift in investor sentiment. Cramer commented on the broader sentiment surrounding ServiceNow, Inc. (NYSE:NOW) and its industry:

“You know I gotta talk about ServiceNow when we get to them. Because I think the decline’s overdone but it doesn’t matter. It doesn’t matter. They have good numbers, they have accelerated share repurchase starts today, probably today, two billion dollars as part of a five billion dollar buyback. Bill McDermott, people were thinking, there was an undercurrent that maybe he’d leave, he signed up for a five year deal, there’s a lot of cooperation with like an Anthropic, it don’t matter, it’s software-as-a-service.

“I think there are a lot of companies that still don’t know how to handle the changes. And you need a company, like Salesforce, or ServiceNow. . .this stock was down as I was interviewing Bill, Bill McDermott the CEO and it was shocking to me, why, because this thing is now at 27 times earnings.”

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Disclosure: None. This article is originally published at Insider Monkey.