Investors likely disappointed ServiceNow considering big deal, says Oppenheimer

After Bloomberg reported that ServiceNow (NOW) is considering acquiring Armis for $7B, Oppenheimer analyst Brian Schwartz contends that investors will likely be disappointed that management is considering more large-company M&A with what would be the biggest deal in company history. The deal raises concerns on the durability of fast organic subscription revenue growth and will weigh on multiples until management can prove out the deal synergies, though adding Armis would be strategic and value-added, says the analyst, who thinks such a move “appears more offensive and supports ServiceNow’s leadership in the enterprise IT market.” Oppenheimer has an Outperform rating and $1,150 price target on ServiceNow shares.