Guggenheim Raises ServiceNow (NOW) Rating to Neutral After Stock Slide

ServiceNow, Inc. (NYSE:NOW) ranks among the best AI stocks to buy according to analysts. Guggenheim upgraded ServiceNow, Inc. (NYSE:NOW) from Sell to Neutral on December 16, stating that the stock’s recent slide brought it back into fair value despite the brokerage’s warning that the company still faces structural issues.

The firm claims that valuation, not an improving outlook, was the driving force behind the upgrade. Although ServiceNow, Inc. (NYSE:NOW) has consistently reported strong quarterly results, the company has not been able to keep up with its peers, which has weakened the argument for betting against it and prevented it from recreating a compelling growth narrative.

The firm identified two primary concerns that are affecting ServiceNow’s sentiment. Firstly, it stated that although management has highlighted artificial intelligence as a major growth driver, expectations surrounding AI have not yet converted into significant revenue.

It also highlighted the growing risk associated with acquisitions. Just this year, ServiceNow, Inc. (NYSE:NOW) has completed a number of transactions and is reportedly considering a far larger acquisition of a security software firm.

According to Bloomberg, ServiceNow, Inc. (NYSE:NOW) is in negotiations to purchase cybersecurity firm Armis. The acquisition might reach almost $7 billion, making it ServiceNow’s largest acquisition to date.

ServiceNow, Inc. (NYSE:NOW) provides a cloud-based platform that helps organizations automate and manage digital workflows across IT, HR, customer service, and other business functions.

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Disclosure: None. This article is originally published at Insider Monkey.