NOW - ServiceNow: Results Aren't Impressive Enough To Justify Valuation (Rating Downgrade)

2024-05-23 02:35:05 ET

Summary

• ServiceNow's stock has rallied over the past year, but its high valuation and decelerating growth pose tremendous risks.
• As its growth decelerates, the company also faces competition from other blue-chip companies in its space, such as Atlassian and Salesforce.
• ServiceNow's aggressive headcount expansion and slowing margin expansion are also concerns for investors.
• The stock is trading at just under 12x FY25 revenue, which is a red flag in a high interest rate environment.

With the S&P 500 continuing to teeter around all-time highs despite persistently high interest rates, it would be an understatement to say that the general sentiment in the markets is nervous. In response to this, investors should be taking great care to prune their portfolios for richly valued growth stocks that are trading at enormous valuation multiples....

For further details see: