ServiceNow Shares Off 50%, Forecast 19% Earnings Growth and $2B Buyback
ServiceNow shares are down over 50% from highs and trade near 24x forward earnings, down from 70x in late 2024, with earnings expected to grow 19% this year. It launched a $2 billion accelerated buyback after beating every key line and raising both quarterly and annual guidance.
1. Valuation Rebound Potential
Jim Cramer highlighted ServiceNow’s 50% decline from peak levels and noted a contraction in its forward P/E multiple from 70x in 2024 to roughly 24x today, suggesting potential undervaluation unless structural headwinds persist.
2. Earnings Growth Forecast
Analysts forecast a 19% increase in earnings this year, underpinned by strong demand for AI-driven automation, low-code development tools and workflow analytics across IT, security, customer service and employee experience functions.
3. Accelerated Share Buyback
ServiceNow unveiled a $2 billion accelerated buyback program to repurchase shares alongside investors, signaling management’s confidence in the long-term growth trajectory and providing support for the stock’s valuation.
4. Quarterly Beat and Guidance Raise
The company delivered beats on every major revenue and profit metric last quarter and issued guidance above expectations for both the current quarter and full fiscal year, although the stock declined following the report.