What We're Looking for From ServiceNow and United Rentals After the Close
We’ll have adjustments to make to our price targets, but what we learn from the quarterly results will determine their size.
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We’ll get quarterly results from ServiceNow NOW and United Rentals URI after the market close Wednesday. Let’s walk through what the market expects and what we’re looking for from each of these TheStreet Pro Portfolio holdings.
ServiceNow
Over the last two and a half months, shares of ServiceNow have gone from being a nice win for the TheStreet Pro Portfolio to a drag on its performance. Despite the cumulative pronounced move lower over those weeks, we have continued to collect ample signs of AI adoption, a positive for the company’s business. However, we have to acknowledge concerns that the macro environment could slow overall IT spending near term, at least until we have greater clarity on trade deals and tariffs. Given its multi-quarter track record of EPS beats and CEO Bill McDermott’s always upbeat presentation during the earnings conference call, the company’s results will serve as a barometer for the software sector.
Consensus expectations call for ServiceNow to deliver EPS of $3.84 on revenue of $3.09 billion and guide the June quarter to EPS of $3.62 on revenue of $3.11 billion. While that June-quarter revenue shows modest progress sequentially, it infers far more substantial growth of 18.5% on a year-over-year basis. We expect that the growth rate and what’s implied for H2 2025 will be a focal point during the earnings call, and that will have us pay close attention to ServiceNow’s subscription revenue and remaining performance obligation figures.
We have seen several price target cuts ahead of ServiceNow’s earnings report. BMO Capital cut its NOW target to $950, JPMorgan reduced its to $970, and Citi lowered its to $1,082. Our current target is $1,250, so we will have some catch-up work to do, but we’ll do so once we have a clearer picture of how ServiceNow is being impacted by enterprise spending, DOGE-related cuts, and AI adoption.
United Rentals
Building on yesterday’s consensus topping March-quarter earnings report from competitor Herc Holdings HRI, Herc CFO Mark Humphrey, during the earnings call, shared that mega projects, infrastructure investments, and federal funding continue to drive strong demand, providing incremental upside for the year. He revealed the company does not anticipate direct impacts on procurement costs from tariffs this year.
Humphrey also indicated utilization levels are expected to improve further compared to the March quarter, which had adverse winter conditions impact its results. We take that to mean utilization levels should follow the typical cadence through the year, which would mean the June and September quarters will be the seasonally strongest.
In our view, the comments from Herc, as well as those made during Eaton’s ETN 2025 Investor Day several weeks ago, set the table for what should be a good earnings report from United Rentals URI. The consensus forecast calls for URI to deliver EPS of $8.81 on revenue of $3.6 billion for the March quarter and guide June quarter EPS to $10.70 on revenue of $3.86 billion. As we think about those EPS figures, let’s remember that when URI terminated its acquisition efforts for H&E Equipment HEES, it said it would immediately restart its stock buyback program, which as of mid-February had $250 million remaining.
We would not be surprised, given where URI shares have traded, to see the company take a sizable bite out of that remaining authorization. We could also see the board of directors re-up its authorization, and that will be a factor that could potentially help us reshape our URI price target.
At the time of publication, TheStreet Pro Portfolio was long NOW, URI and ETN.
