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On Wednesday, Cantor Fitzgerald analyst Thomas Blakey reaffirmed an Overweight rating on ServiceNow (NYSE:NOW) stock, with a steady price target of $1,332.00. According to InvestingPro data, ServiceNow, now valued at $237.31 billion, maintains an impressive "GREAT" financial health score of 3.2. Blakey expressed a cautious stance ahead of the company’s fourth-quarter earnings for 2024, citing concerns over potentially crowded long positions, robust stock performance throughout the calendar year 2024, and remarks from management hinting at possible variability in contracted remaining performance obligations (cRPO) for the calendar year 2025. Despite these short-term reservations, Blakey remains optimistic about ServiceNow’s prospects in both the medium and long term.
ServiceNow’s shares have seen significant growth, rising 22% since the previous earnings report and 50.1% over the calendar year 2024, outperforming the iShares Expanded Tech-Software Sector ETF (IGV), which increased by 14% and 23.4%, respectively, during the same periods. The company’s strong performance is backed by impressive fundamentals, including a 79.24% gross profit margin and 23.48% revenue growth over the last twelve months. Blakey anticipates a solid fourth-quarter report with a 2% increase in Subscription revenue and cRPO growth, supported by increased sales and marketing expenditure and a higher number of quota-carrying sales personnel.
The analyst’s expectations are based on a forecast that was not deemed overly aggressive and on predominantly positive checks regarding IT spending trends, particularly consolidated/platform spending and artificial intelligence (AI). ServiceNow’s platform, which is central to workflow automation, aligns with current AI trends and is expected to gain from agentic AI, which offers contextual understanding, and potential expansion into adjacent data management markets through its Workflow Data Fabric.
Blakey notes the positive investor sentiment towards ServiceNow but warns that the strong performance of the stock and the optimistic outlook may lead to increased volatility. This could stem from any unexpected variations in the cRPO guidance or results, possibly as a result of extended sales cycles for the company’s Pro Plus SKU with its largest clients.
In other recent news, Salesforce (NYSE:CRM) and ServiceNow are making significant strides in the AI sector, with Barclays (LON:BARC) highlighting their potential to benefit from more cost-efficient and accessible AI models. ServiceNow has also been the focus of numerous financial firms, with Goldman Sachs maintaining a $1,200 target on the company’s stock, despite potential currency-related headwinds. TD Cowen also maintains a positive outlook on ServiceNow, reiterating a Buy rating and a price target of $1,300.
ServiceNow’s robust financial performance and strategic contract wins, including a significant federal contract award, have positioned the company favorably in the market. BofA Securities recently raised the price target for ServiceNow shares from $1,075 to $1,280, while JMP Securities increased its price target from $1,000 to $1,300, both maintaining positive ratings.
ServiceNow has announced plans to acquire Cuein, an AI-driven conversation data analysis firm, a move expected to enhance ServiceNow’s Workflow Data Fabric technology. This is in line with the company’s strong growth trajectory, which has seen a 23.48% revenue growth over the last twelve months. These are the latest developments in the ongoing story of ServiceNow’s strategic growth and expansion.
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