ServiceNow stock dipped Wednesday amid its acquisition of an India-based firm that specializes in robotic process automation used in companies’ back offices.
Morgan Stanley analyst Keith Weiss expects the purchase of Intellibot, announced on Tuesday, to help ServiceNow‘s (NOW) push into the Indian market. He noted in a report that Intellibot is a small company with fewer than 50 employees and likely less than $10 million in annual revenues.
ServiceNow expects to close the Intellibot deal in the second quarter of 2021.
“ServiceNow announced a commitment to expand its footprint in India, which is one of the fastest-growing markets for the company,” Weiss said.
He went on to say: “Along with the two new data centers to be built in India by (first quarter of 2022), ServiceNow plans to double its staff in India over the next three years as India currently hosts NOW’s second largest R&D center.”
ServiceNow Stock Pulls Back Amid Market Rotation
ServiceNow stock fell 1.2% to close at 472.32 on the stock market today. The Nasdaq composite fell 2% to 12,961.89.
Robotic process automation software automates accounting, billing and customer service work. Additionally, RPA software is best suited for manual, high volume, repetitive tasks in back-office operations.
“ServiceNow plans to integrate Intellibot’s RPA capabilities natively into the NOW platform, so customers can drive more end-to-end workflow automation by connecting modern and legacy systems,” Weiss added.
At Canaccord Genuity, ServiceNow stock analyst David Hynes also praised the purchase.
“We like this deal for ServiceNow as it’s at least thematically synergistic with the firm’s acquisition of Element AI and serves as a foothold in the fast-growth, emerging category of RPA,” Hynes said in his note to clients.
UiPath, Automation Anywhere and Blue Prism Group are the three biggest RPA vendors. Blue Prism trades on the London Stock Exchange.
Incumbents Acquire RPA Software Startups
Automation Anywhere in mid-March announced a partnership with Alphabet‘s (GOOGL) Google. The companies plan to integrate RPA capabilities into various Google cloud computing products.
Meanwhile, ServiceNow stock belongs to the IBD Leaderboard. However, ServiceNow stock has retreated from an all-time high of 598.37. Software growth stocks pulled back in early 2021 amid a broad market rotation.
ServiceNow’s software tracks and manages services provided by information-technology departments. Its self-service tech portal enables company employees to access administrative and workflow tools.
ServiceNow stock holds a Relative Strength Rating of only 31 out of a best-possible 99.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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