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On Wednesday, ServiceNow (NYSE:NOW) received an increased price target from BMO Capital, with analyst Keith Bachman setting the new goal at $1,150, up from the previous $1,025, while maintaining an Outperform rating on the stock. The revision reflects confidence in the company’s growth prospects and product offerings. According to InvestingPro data, the stock currently trades at a premium to its Fair Value, with a P/E ratio of 139x and strong analyst consensus rating of 1.51 (where 1 is Strong Buy).
Bachman’s optimism is rooted in ServiceNow’s continuous enhancement and expansion of its portfolio, which he believes will bolster the adoption of the AI/Plus SKU and support ongoing upsell and cross-sell opportunities. The company’s impressive 79% gross profit margin and 21% revenue growth over the last twelve months support this positive outlook. According to the analyst, these factors are instrumental in sustaining revenue growth rates for the company.
The positive sentiment is further supported by discussions with partners at the recent Knowledge 25 event, where feedback on the adoption of the Plus service and its pricing strategy was encouraging. Despite potential challenges from the Federal Reserve’s policy decisions, Bachman suggests that the current combined remaining performance obligations (CRPO) provide a solid foundation for the company’s fiscal year 2025 subscription revenue projections. InvestingPro analysis shows ServiceNow maintains a "GREAT" overall financial health score of 3.02, with particularly strong ratings in growth (3.64) and profit (3.68) metrics. Want deeper insights? InvestingPro offers 14 additional exclusive tips for ServiceNow, along with comprehensive financial analysis in the Pro Research Report.
Bachman’s statement underscores the robustness of ServiceNow’s business model and market position: "We believe that NOW’s ongoing portfolio deepening and expansions will help support AI/Plus SKU adoption, sustain upsell and cross sell, as well as revenue growth rates. Partner conversations at Knowledge 25 were positive on Plus adoption and pricing lift. Even with some Fed headwinds, we believe the current CRPO balances suggest our FY25 subscription rev estimates are reasonable. We retain our Outperform rating and take our target price to $1150."
ServiceNow’s stock continues to be viewed favorably by BMO Capital, as evidenced by the maintained Outperform rating and the increased price target, signaling confidence in the company’s future performance. The company’s market capitalization stands at $214.6 billion, reflecting its position as a prominent player in the software industry.
In other recent news, ServiceNow has unveiled its latest financial and strategic advancements, generating significant interest among investors. Cantor Fitzgerald has reaffirmed its Overweight rating on ServiceNow, maintaining a price target of $1,048.00, following insights gained at the company’s financial analyst day and Knowledge 2025 event. The firm expressed confidence in ServiceNow’s AI capabilities and strategic positioning within the AI landscape. During the Knowledge 2025 event, ServiceNow announced the introduction of AI agents for enterprise security and autonomous IT operations, aiming to enhance cybersecurity and IT efficiency. These AI agents are designed to streamline workflows and improve response times across various operations. Additionally, ServiceNow launched its Workflow Data Network, a comprehensive ecosystem that integrates data platforms and tools, enhancing its AI-driven Workflow Data Fabric. In a strategic move, ServiceNow has partnered with Amazon (NASDAQ:AMZN) Web Services (AWS) for real-time data integration, facilitating data unification and analytics. The company also announced its intent to acquire data.world, aiming to bolster its data cataloging and governance capabilities. These developments underscore ServiceNow’s commitment to leveraging AI for business transformation and operational resilience.
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