Software maker ServiceNow recently retreated from an all-time high it set in mid-February, giving it a chance to regroup. Lately it's started climbing again, toward a fresh high. On Monday, the Relative Strength (RS) Rating for ServiceNow stock shot up 11 points to 76, up from 65 at the end of last week.
AI play ServiceNow says on its website it has integrated general artificial intelligence into its software. "Improve productivity and efficiency across your organization with GenAI built directly into the ServiceNow platform."
ServiceNow stock is building a consolidation with an 815.32 buy point, the all-time high it set on Feb. 9. From that high it fell to a 637.99 low on May 31 then rebounded. Monday afternoon it traded at about 760, up more than 1% for the day and up nearly 20% from its May low.
Be aware that it's a third-stage base. Such later-stage patterns can succeed but are less likely to do so than first- or second-stage consolidations.
Upgraded ServiceNow Stock Nears Benchmark
Market history reveals that the market's biggest winners typically have an RS Rating above 80 as they launch their largest runs. See if ServiceNow stock can continue to show renewed price strength and hit that benchmark.
Can You Really Time The Stock Market?
Watchlist candidate ServiceNow stock has an 89 Composite Rating out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Additionally, Santa Clara, Calif.-based ServiceNow carries a perfect 99 Earnings Per Share Rating and a terrific A SMR Rating (sales + profit margins + return on equity) on an A-to-E scale with A superb and E dismal.
One yellow flag to watch is ServiceNow stock's D+ Accumulation/Distribution Rating, a gauge of institutional buying. The D+ rating shows that ETFs, insurance company funds and other institutional investors are selling more shares than buying. Look for that to improve to a C or better.
Sales Up 24%, Profits Pop 44%
The company's revenue grew 24% last quarter on a year-over-year basis to $2.6 billion, edging down from 26% growth the prior quarter. Meanwhile, earnings surged 44% to $3.41 per share, up from 36% growth in the prior report. ServiceNow says on its website it plans to announce second quarter results after the market closes on July 24.
ServiceNow stock earns the No. 8 rank among its peers in the 120-stock Computer Software-Enterprise industry group. Magnite, Palantir Technologies and Bandwidth are among the top five highly rated stocks in the group.
IBD's proprietary Relative Strength Rating identifies price movement with a 1 (worst) to 99 (best) score. The score shows how a stock's price movement over the last 52 weeks holds up against all the other stocks in our database.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
RELATED:
Get Full Access To IBD Stock Lists And Ratings
Which Stocks Are Showing Improved Price Performance?
Why Should You Use IBD's Relative Strength Rating?
Join IBD Live Each Morning For Stock Tips Before The Open
Ready To Grow Your Investing Skills? Join An IBD Meetup Group!
