5 Best Depressed Stocks to Buy Now

4. ServiceNow Inc. (NYSE:NOW)

Number of Hedge Fund Holdings: 99

YTD Decline (As of November 9): 36.41%

Based in Santa Clara, California, ServiceNow Inc. (NYSE:NOW) is an American software company which specializes in the development of cloud computing platforms to assist companies in regulating digital workflows for enterprise operations.

On October 27, Wolfe Research analyst termed the stock ‘the safest SaaS asset to own into year-end’. The analyst lowered the price target on ServiceNow Inc. (NYSE:NOW) to $475 from $600, maintaining at Outperform rating on the shares. He adjusted his assumptions following the company’s Q3 2022 returns which surpassed consensus across constant currency cRPO, constant currency subscription revenue and operating margins. According to the analyst, the stock is well shielded from macro-economic pressures – something which is not reflected well in the company’s undervalued share price.

As of the second quarter of 2022, investor interest around ServiceNow Inc. (NYSE:NOW) skyrocketed, with 99 hedge funds long the stock, up from 90 in the preceding quarter. Furthermore, in Q3 2022, ServiceNow Inc. (NYSE:NOW) posted an EPS of $1.96, beating estimates of $1.84 by $0.12.

Here is what Baron Funds had to say about ServiceNow Inc. (NYSE:NOW) in their Q3 2022 investor letter:

“ServiceNow, Inc. (NYSE:NOW) is an enterprise software leader offering cloud-based solutions that improve employee workflow efficiency through automation and digitization. The company’s brand, extensive go-to-market reach, and product excellence allowed it to materially grow its business with the largest companies in the world, including 80% of the Fortune 500. As of its latest quarter, the company had over 1,400 customers spending close to $4 million per year on average, and recently announced a $250 million contract with a governmental entity. ServiceNow’s industry-leading customer renewal rates of over 97% underscore the criticality of the company’s solutions to its customers. The stock underperformed as quarterly bookings were negatively impacted by longer-than-expected sales cycles due to macroeconomic dynamics creating a more complex spending environment. In addition, with international revenues accounting for about one-third of the company’s business, investors expect foreign currency and pricing dynamics to generate additional headwinds. We continue to believe in the company’s long-term opportunities as it benefits from digitization initiatives, a unique and growing product line, and strong management team.”