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Josh Brown: ServiceNow is going to be an exciting name for years to come

Key Points
  • Ritholtz Wealth Management CEO Josh Brown bought ServiceNow on Wednesday.
  • "This breakout is as clear as a bell...it's going to be an exciting name for years to come," he said while making the bull case for the stock on Thursday's "Halftime Report"
  • On Wednesday the stock broke above its $177 resistance level -- a key technical indicator according to Brown -- and since it's climbed higher after surpassing $177, Brown believes the stock is firmly in an uptrend.

Josh Brown is making portfolio moves, and he's betting there are clear skies ahead for one key cloud player.

On Wednesday the Ritholtz Wealth Management CEO and "Halftime Report" trader bought ServiceNow. He believes the stock is in the midst of a technical breakout, and he also thinks the company's focus on enterprise rather than a "freemium" business model puts it ahead of its rivals as competition in the cloud increases.

This breakout is as clear as a bell
Josh Brown
Ritholtz Wealth Management on ServiceNow

As a market technician, Josh Brown studies charts to identify how a stock is trending. He then uses that information to make bets on how the stock could move in both the near and long term.

And on Wednesday, according to Brown, ServiceNow broke through one of its key technical levels. It topped $177, which had previously been resistance, or the price at which it could hit but then not maintain. This time, however, the stock kept its momentum, trading as high as $182.50.

Brown noted it's "breaking out" since it was able to maintain the climb higher and trade meaningfully above its former resistance, but now support level of $177.

Brown also likes the company's business model, and he believes ServiceNow is well positioned relative to its competitors.

Unlike rival Dropbox, for example, which focuses on a "freemium" business model and individual users, ServiceNow targets big businesses that utilize enterprise software.

"They are landing monster deals all over the world with the two thousand biggest corporations around the globe. ServiceNow is penetrating...[they are] starting with mega-enterprise deals and landing one after another," he said on Thursday's "Halftime Report."

Josh Brown: Why I bought ServiceNow

"I think this is going to be a very exciting name for years to come," he added.

Shares of ServiceNow are up 85% in the past year, and the stock trades at 68.8X forward earnings.

Josh Brown owns ServiceNow.