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On Monday, Bernstein analysts maintained their Outperform rating and $1,021.00 price target for ServiceNow stock (NYSE:NOW), which currently trades at $789.51. According to InvestingPro data, the company commands a market capitalization of $163.47 billion and trades at a P/E ratio of 116.85. The firm’s analyst, Peter Weed, highlighted ServiceNow as a consistently sought-after name within the software sector. Weed’s commentary shed light on the company’s valuation, noting that ServiceNow is often fully valued, and their Outperform rating underscores its status as a quality compounder rather than a candidate for re-rating.
Weed also remarked on the occasional market dynamics that offer investors a window to purchase ServiceNow shares at a discount. His observation is particularly relevant now, as InvestingPro data shows the stock has declined 19.76% year-to-date. He recalled an instance from the previous year when Salesforce (NYSE:CRM) experienced a challenging first quarter, causing ServiceNow’s stock to fall in sympathy, despite there being no direct correlation between the two companies’ performances. According to Weed, such situations present fleeting yet excellent buying opportunities for the discerning investor.
ServiceNow has been recognized for its robust position in the crowded software industry, demonstrated by its impressive 79.18% gross profit margins and 22.44% revenue growth in the last twelve months. Analysts at Bernstein have consistently pointed out that while the stock may not always present a re-rating opportunity, its solid performance and compound growth potential make it an attractive option for long-term investors. InvestingPro analysis reveals the company maintains a GOOD financial health score, with particularly strong marks in profitability and growth metrics.
The analyst’s comments come as a reinforcement of the firm’s stance on ServiceNow, suggesting that the company’s stock remains a top pick due to its enduring appeal and the rare chances to buy at a discount. Bernstein’s price target of $1,021.00 remains unchanged, indicating their confidence in the stock’s future performance.
Investors and market watchers will likely continue to monitor ServiceNow’s stock, keeping an eye out for any market movements that could offer similar buying opportunities as those mentioned by Bernstein’s analysis.
In other recent news, ServiceNow has announced its acquisition of AI company Moveworks for $2.85 billion. The acquisition is expected to enhance ServiceNow’s AI-driven workflow automation capabilities by integrating Moveworks’ technology, which simplifies employee interactions with enterprise systems. This strategic move aims to boost ServiceNow’s AI platform utilization across various sectors and is anticipated to close in the second half of 2025, pending regulatory approvals. Additionally, Erste Group has downgraded ServiceNow’s stock rating from Buy to Hold due to valuation concerns, despite acknowledging the company’s rapid growth and successful integration of generative AI into its platform.
In other developments, ServiceNow has revised its company bylaws, including a new forum selection clause and adjustments to stockholder actions at annual meetings, as part of its efforts to streamline governance. The company has also launched a Government Transformation Suite for U.S. federal agencies, designed to enhance transparency and efficiency in government operations. This suite includes features like asset optimization and time-saving workflows, with support from partners like Accenture (NYSE:ACN) Federal and Intact.
Furthermore, Citi analyst Tyler Radke has adjusted ServiceNow’s stock price target to $1,426, maintaining a Buy rating. Radke noted that while some of ServiceNow’s recent performance metrics fell short of market expectations, there are positive indicators such as strong adoption of its GenAI SKU, Pro Plus. Despite slightly conservative guidance for the first quarter of 2025, ServiceNow’s fourth-quarter profitability exceeded expectations, and initial guidance for operating margin and free cash flow in FY25 were above consensus.
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