On Thursday, numerous stocks saw steeper-than-average drops when news items concerning them combined with generally gloomy investor sentiment.
One such victim was next-generation business software developer ServiceNow (NOW +0.33%), which saw its stock absorb a more than 5% blow to its share price that day. An analyst's price target reduction convinced some investors to hit the sell button. The S&P 500 index, meanwhile, slipped by 3.5% that session.
A bull makes a cut
Well before market open, Kash Rangan from influential investment bank Goldman Sachs reset his fair value assessment on ServiceNow. The new level is $1,050 per share, $150 below its previous mark; however, the analyst maintained his buy recommendation on the shares.
According to reports, Rangan's adjustment comes from his belief that ServiceNow might take a hit to its fundamentals in both its second quarter, and across the entirety of this year. After all, the company has substantial business with public-sector clients, which will be affected by the government's current push to downsize.
On the plus side, investors have been aggressively selling out of ServiceNow, making it a bargain on its current valuations, Rangan opined. The prognosticator also waxed bullish on the company's considerable efforts in integrating artificial intelligence (AI) functionalities to its offerings.
NYSE: NOW
Key Data Points
Down but still not out
We'll discover later this month if the analyst's positive outlook is justified. ServiceNow is scheduled to report its first-quarter results after market close on Wednesday, April 23.
I'm inclined to agree with Rangan's latest analysis on ServiceNow. I think the company has been somewhat unfairly punished for its public sector exposure, and at the moment it's an excellent candidate for a bounce-back given its notably improving fundamentals.
