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On Thursday, Evercore ISI analyst Kirk Materne adjusted the price target for ServiceNow (NYSE:NOW) stock, increasing it to $1,000 from the previous $925, while maintaining an Outperform rating on the shares. According to InvestingPro data, analyst consensus remains highly bullish with targets ranging from $716 to $1,300, reflecting the stock’s potential upside of 23%. The revision follows ServiceNow’s first-quarter performance, which Materne highlighted as particularly strong in terms of the Current Remaining Performance Obligations (CRPO) outperformance.
Materne noted that ServiceNow continues to witness positive demand signals within its pipeline. This optimism is supported by the company’s impressive financial metrics, with InvestingPro data showing a robust revenue growth of 22.4% and industry-leading gross profit margins of 79.2%. Despite potential concerns regarding the conservativeness of the company’s guidance, the analyst believes that the significant CRPO beat in the first quarter sets a higher benchmark for ServiceNow to work from. He anticipates that it is reasonable to expect the CRPO to bottom in the high teens by the third quarter, even after adjusting for a more challenging macroeconomic environment.
The analyst also mentioned the resilience of the Federal Reserve and touched upon ServiceNow’s strategic decisions, such as removing the high end of its FY25 subscription revenue guide, which he interprets as the company adding an additional cushion to its guidance.
Looking ahead, Materne suggests that the upcoming analyst day will likely shift focus from macroeconomic conditions to ServiceNow’s artificial intelligence strategy and monetization opportunities. He also expects attention to be given to the company’s long-term outlook, particularly as it integrates new opportunities like Raptor DB and Moveworks.
Materne’s price target of $1,000 is based on approximately 40 times the enterprise value to the calendar year 2026’s free cash flow (EV/CY26 FCF) for ServiceNow. The company’s strategic moves and robust first-quarter performance have reinforced the analyst’s positive stance on the stock.
In other recent news, ServiceNow has reported its first-quarter 2025 earnings, surpassing expectations with non-GAAP earnings per share of $4.04, which exceeded the consensus estimate of $3.83. The company’s revenue reached $3.088 billion, slightly above the forecasted $3.084 billion, marking an 18.5% year-over-year increase. Notably, ServiceNow’s current remaining performance obligations amounted to $10.310 billion, exceeding the consensus estimate and representing a robust 22% year-over-year growth. In partnership developments, ServiceNow has teamed up with Devoteam to modernize customer relationship management across Europe, the Middle East, and Africa, leveraging AI capabilities to enhance business outcomes.
Meanwhile, ServiceNow faces challenges with product pricing and adoption rates, as a system integrator noted that many customers find the license costs excessive and about half of the products remain unused a year after purchase. On the analyst front, JMP reaffirmed its Market Outperform rating for ServiceNow with a $1,300 price target. However, BMO Capital Markets and JPMorgan have adjusted their price targets to $950 and $970, respectively, while maintaining positive ratings. BMO cited macroeconomic uncertainties, while JPMorgan highlighted mixed partner feedback and potential impacts from economic conditions, though they remain optimistic about ServiceNow’s long-term growth potential and its diverse set of growth vectors.
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