Canaccord raises ServiceNow stock price target to $1,275

On Thursday, Canaccord Genuity adjusted its outlook on ServiceNow (NYSE:NOW) shares, raising the price target to $1,275 from the previous $1,200, while reiterating a Buy rating on the stock. The increase comes despite a post-earnings dip in the company’s share price, which the analyst attributes to currency fluctuations and a narrower earnings beat than anticipated. According to InvestingPro data, ServiceNow currently trades at a P/E ratio of 176x, reflecting high market expectations for the company’s growth potential.

Richard Davis, the analyst from Canaccord Genuity, acknowledged the high valuation of ServiceNow stock but expressed unwavering confidence in the company’s prospects. Davis noted that nothing from the recent earnings call or follow-up discussions with management has undermined his view of the company’s strong position. This confidence appears justified by ServiceNow’s impressive gross profit margin of 79.2% and its "GREAT" financial health score on InvestingPro, which offers 15+ additional insights about the company’s performance. He emphasized the growing strategic importance of ServiceNow, the acceleration of its AI and Agentic initiatives, and the potential for the pricing model to capture additional upside as AI adoption increases.

The analyst’s commentary highlighted that ServiceNow’s strategic standing appears to be strengthening. Davis pointed out that the company is gaining momentum with its artificial intelligence (AI) technology and the recent introduction of Agentic, which he believes could significantly contribute to the company’s growth.

Davis also mentioned the pricing model used by ServiceNow, suggesting it is well-structured to benefit from the maturing AI adoption curves. He sees this as a positive factor that could lead to increased profitability and market share for the company in the future.

Despite the after-hours stock price retreat, Davis advised investors to look past the valuation concerns and consider purchasing shares, especially when they are trading lower than usual. His commentary implies that the current lower price could be an opportune moment for investors to add ServiceNow to their portfolios. The company has demonstrated strong momentum with a 43.2% price return over the past six months, while maintaining robust revenue growth of 22.4% in the last twelve months. For a comprehensive analysis of ServiceNow’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.

In summary, Canaccord Genuity maintains a bullish stance on ServiceNow, with the raised price target reflecting the firm’s belief in the company’s continued growth and its ability to capitalize on its AI and Agentic developments.

In other recent news, ServiceNow reported a 21% year-over-year increase in both subscription and total revenues for the fourth quarter of 2024, amounting to $2,866 million and $2,957 million respectively. The company also unveiled its AI Agent Orchestrator, designed to streamline enterprise operations. Needham analysts revised their price target for ServiceNow shares, reducing it from $1,500.00 to $1,200.00 while maintaining a Buy rating. Bernstein SocGen Group raised ServiceNow’s stock price target to $1,021 while maintaining an Outperform rating, and JMP Securities reaffirmed their Market Outperform rating, maintaining a price target of $1,300. ServiceNow also hinted at forthcoming go-to-market strategies and the development of more cohesive solutions, to be further elaborated at the Knowledge 2025 event in May. The company expanded its collaboration with Google (NASDAQ:GOOGL) Cloud and entered a partnership with Visa (NYSE:V) to modernize Visa’s Dispute Management Service using its AI technology. These are recent developments in ServiceNow’s strategic growth and expansion.

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