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On Wednesday, ServiceNow (NYSE: NYSE:NOW) received a reaffirmation of its Overweight rating and a price target of $1,048 from Cantor Fitzgerald. The firm’s stance remains positive on the stock, acknowledging the near-term caution similar to the previous quarter leading up to the fourth quarter of 2024 earnings release. According to InvestingPro data, ServiceNow maintains a "GREAT" financial health score, with impressive gross profit margins of 79.2% and strong revenue growth of 22.4% over the last twelve months. The analysts noted that although ServiceNow’s shares have seen a pullback, they are trading at approximately 10.7 times the projected 2026 revenue. The price target set by Cantor Fitzgerald is based on a multiple of around 14 times, which aligns with ServiceNow’s one-year average next twelve months (NTM) multiple. With a current market capitalization of $169 billion and a P/E ratio of 118.3, ServiceNow appears to be trading near its InvestingPro Fair Value, suggesting balanced market pricing. Discover 12 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
ServiceNow’s stock price reflects expectations that may require a strong first-quarter report for 2025, including a beat and raised guidance. Cantor Fitzgerald analysts believe that if ServiceNow maintains its new business levels year-over-year, achieving a 20% year-over-year subscription revenue growth in the first quarter of 2025 is attainable and would slightly surpass the mid-point of the company’s guidance. The company’s next earnings report is scheduled for April 23, 2025, just 7 days away, making it a crucial catalyst for investors tracking the stock’s performance.
Despite the positive outlook, the firm also expressed caution due to uncertainties, particularly in the U.S. Federal revenue segment, which comprises about 15% of ServiceNow’s revenue. Given these uncertainties and the broader macroeconomic environment, ServiceNow is not expected to provide an increased forecast at this time.
Cantor Fitzgerald is optimistic about ServiceNow’s acquisition of Moveworks and the overall use of agentic AI. However, they also recognize challenges with pricing and the implementation of solutions, which could dampen the potential for near-term upside. The analysts made minor adjustments to their model for committed remaining performance obligations (cRPO), taking into account management’s comments about seasonal patterns. These adjustments do not affect the revenue estimates or the price target for ServiceNow.
In other recent news, ServiceNow has announced its intent to acquire Logik.ai, aiming to enhance its Customer Relationship Management (CRM) capabilities. This acquisition is expected to streamline sales processes and improve efficiency for sales organizations by integrating Logik.ai’s AI-powered Configure, Price, Quote (CPQ) technology. In addition to this development, several analysts have adjusted their price targets for ServiceNow. Oppenheimer lowered its target to $970 while maintaining an Outperform rating, citing strong cost discipline and the company’s robust adoption of generative AI. Goldman Sachs also reduced its target to $1,050, reaffirming a Buy rating, and noted potential risks to ServiceNow’s guidance due to tariff policy volatility and public sector spending cuts.
Raymond (NSE:RYMD) James adjusted its price target to $1,000, maintaining an Outperform rating, and highlighted the potential for accelerated AI adoption as a key discussion point at ServiceNow’s upcoming user conference. BMO Capital Markets lowered its target to $990, expressing concerns over economic issues that could affect IT demand, but retained an Outperform rating. Despite these adjustments, analysts remain optimistic about ServiceNow’s fundamentals and its strategic moves, such as the acquisition of Logik.ai, which are seen as strengthening its position in the market. These developments reflect a broader sentiment of cautious optimism among analysts regarding ServiceNow’s future performance.
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