This stock has had an incredible 2019 and remains a top pick, despite some recent big-time volatility. ServiceNow Inc. (NYSE: NOW) develops and sells a hosted, subscription-based suite of services designed to automate various IT department functions, such as help desk, operations management and change/release management.
The company also sells a number of applications that automate various self-service related applications outside of the IT department, such as HR onboarding, facilities requests and governance, risk and compliance.
ServiceNow had some changes at the C Suite level, and the market at first took a dim view. Jefferies said this:
ServiceNow’s CEO announced that he will be departing by year-end 2019 to take the CEO role at Nike. He will be replaced by the former SAP CEO Bill McDermott. Given the new CEO’s track record in enterprise software, we view this hire positively. The company also released preliminary third quarter numbers and updated 2019 estimated guidance. While the company beat consensus third quarter subscriber billings expectations, the implied fourth subscriber revenues and billings guides were both below consensus and shares were down big last Friday.
The $330 Jefferies price objective compares with the $303.09 consensus price target and the most recent close at $244.70 a share.
This has been one of the most talked about companies over the past two years, and the Jefferies team remains very positive on the shares. Tesla Inc. (NASDAQ: TSLA) manufactures and sells electric vehicles, particularly its high-end Model S and X, as well as the mass-market-oriented Model 3. It makes some of America’s most eco-friendly cars.
Tesla also generates revenue from selling zero-emission vehicle credits to original equipment manufacturers, installing, operating and selling solar energy systems (previously SolarCity), and manufacturing and selling energy storage systems to customers.
The stock has been volatile, and CEO Elon Musk is unpredictable as well. However, the analysts remain positive and noted this in the wake of surprising third-quarter results:
Tesla reported third quarter results last week. Free cash flow of $371 million was well ahead of the $72 million consensus and slightly ahead of Jefferies estimates though capital expenditures remained low. We expect capex will ramp in the coming quarters and management and confirmed improved capital efficiency. Model Y is due to launch in Summer 2020 estimated, slightly ahead of our expectations for the third quarter of 2020 and mgmt confirmed their expectations for higher margins on model Y versus the M3. Overall, we think the third quarter results and tone from the call are supportive of the outlook for 2020 growth.
The Jefferies price target remains at $300. The consensus target is lower at $261.40, but the stock ended Monday at $327.71.
These stocks offer investors strength in their specific technologies and industries, with the potential to generate some significant portfolio alpha. These top companies are suitable for growth accounts that have a larger degree of risk tolerance. With earnings out of the way, some clear sailing could be the course for the fourth quarter.
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