ServiceNow Is Up Some 55% Since April. What Might Happen Next?

ServiceNow NOW has risen nearly 55% in the past three months as the AI-focused business-management firm and member of the S&P 500 SPX gained ground ahead of and following its well-received Q1 earnings. With Q2 earnings due out later this month, what does the stock's fundamental and technical analysis say now?

Let's take a look:

ServiceNow's Fundamental Analysis

For those unfamiliar with NOW, the company sells an AI-powered platform that links clients' workers and devices to a firm's work processes and data. This helps increase productivity, improve efficiency and maximize business outcomes.

ServiceNow's cloud-based platform helps businesses digitize workflows, manage client relationships and reimagine customer experience.

The company said on Wednesday that it will report Q2 results on July 23, which could be a key date for the stock. After all, NOW rose 15.5% on heavy volume the day after management released Q1 earnings on April 23 after the bell.

As for Q2, the Street is looking for NOW to post $3.57 of adjusted earnings per share on $3.12 billion of revenue. That would compare well to the $3.13 in adjusted EPS and $2.6 billion of revenue that ServiceNow reported in the same quarter last year.

Perhaps most importantly, NOW had $10.3 billion of performance obligations as of Q1's end. That was good for 22% year-over-year growth, which bodes well for the company's future.

That said, 24 of the 35 sell-side analysts that I found who cover NOW have lowered their Q2 earnings estimates since the quarter began, while only 11 have raised their outlooks. That's typically bearish.

ServiceNow's Technical Analysis

Now let's check out NOW's chart going back to January and running through earlier this week:
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Readers will see that ServiceNow hit an $1,198.09 all-time intraday high in late January, then went into what appears to be a fairly standard "cup-with-handle" pattern from there. That's generally considered a bullish set-up.

Another bullish consideration is the so-called "golden cross" that the stock saw in late June. That's when ServiceNow's 50-day Simple Moving Average (or "SMA," marked with a blue line) crossed above the stock's 200-day SMA (denoted with a red line) at the chart's right.

Lastly, the bulls might point to a still-unfilled gap that NOW has from late January. Stocks don't always fill in such gaps, but historically, most eventually do.

However, let's now look at the other side of the coin -- the potentially bearish signals that the above chart is showing.

First, the "handle" part of NOW's "cup-with-handle" pattern has flattened out somewhat and really is rather shallow. Some technicians feel that the deeper the handle, the stronger the rally that follows. So, some might see ServiceNow's shallower handle in this pattern as not especially bullish.

Meanwhile, NOW's Relative Strength Index (the gray line at the chart's top) is neutral, but appears to be weakening.

Similarly, the stock's daily Moving Average Convergence Divergence indicator (or "MACD," marked with black and gold lines and blue bars at the chart's bottom) looks slightly bearish here.

The histogram of the ServiceNow's 9-day Exponential Moving Average (or "EMA," denoted by blue field) is below zero and has been since late May. This can typically be seen as bearish.

On top of that, the stock's 12-day EMA (the black line) and its 26-day EMA (the gold line) appear to be wrestling for the upper hand, although they both remain in positive territory.

The bulls will be rooting for the 12-day EMA to win out, while the bears will be cheering for the 26-day EMA.

Add it all up and ServiceNow looks like it's well-positioned to go ... somewhere. The question is where.

The stock's upside pivot stands at $1,046 in the chart above, having been created by the cup-with-handle pattern. That's somewhat below the $1,052.77 that ServiceNow was trading at intraday Thursday, but the stock hasn't yet held that level.

NOW's downside pivot would be its 200-day SMA (around $969 in the chart above). Losing that support line would likely force portfolio managers who are invested in the name to reduce their long-side exposure.

(Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no position in NOW at the time of writing this column.)

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