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ServiceNow shares surge more than 10% as billings crush expectations

ServiceNow
Source: ServiceNow

Shares of ServiceNow surged as high as 13 percent on Thursday after the company reported third-quarter earnings above analyst expectations, spurring upbeat analyst commentary.

The stock later pared some of its gains to end the session 7 percent higher.

The company posted adjusted earnings per share of 23 cents on $357.7 million in revenue. Analysts had expected ServiceNow to report earnings of 21 cents a share on revenue of $352.2 million, according to a Thomson Reuters consensus estimate.

ServiceNow said its billings came in at $404.3 million for the quarter, up 41 percent from the comparable year-ago period. That figure easily topped analyst projections for $383.2 million as well as the company's guidance for billings betweeen $380 million and $385 million, according to StreetAccount.

Mizuho said in a research note that ServiceNow saw a "very strong quarter as a result of significant large deal activity and greater attach of its products within its installed base." The firm raised its price target to $90 from $85 and reiterated its "buy" rating on the stock.

ServiceNow "is emerging as one of the few elite category-leading enterprises [software-as-a-service] companies," BTIG said in a research note. The firm, which has a "buy" rating on the stock, raised its price target to $95 from $85.

Shares of ServiceNow are up nearly 6 percent in the past 12 months.

Disclosure: Mizuho Securities and or its affiliates makes a market in ServiceNow. BTIG expects to receive or intends to seek compensation from ServiceNow for investment banking services in the next three months.