By Senad Karaahmetovic
Shares of ServiceNow (NYSE:NOW) are moving higher in pre-market Tuesday after Baird analysts upgraded to Outperform as they believe the software maker is "well positioned" for a tough macro environment.
"While the macro environment remains uncertain (elongated sales cycles, increased deal scrutiny, etc.), NOW has consistently cited that secular digital transformation tailwinds outweigh current macro crosswinds. We believe NOW's revenue growth likely remains durable and resilient," the analysts said in the upgrade note.
The upgrade comes on the back of the end-market resiliency, durable growth trends, and reasonable valuation. The analysts made a move after attending the company's Federal Symposium in DC.
"We believe 2023 guidance prudently factors in the current macro and view NOW deals as less discretionary in nature," they added.
Overall, the analysts see a "favorable" risk-reward in NOW stock as it trades near the low end of its historical multiple range.
"We believe ongoing strong execution and combination of 20% + revenue growth and operating/FCF margin expansion could help drive multiple expansion over time," they concluded.
The NOW stock target is raised to $548 per share from the prior $475.