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On Tuesday, JPMorgan analysts adjusted their outlook on ServiceNow (NYSE:NOW) shares, reducing the price target to $970 from the previous $1,200, while maintaining an Overweight rating on the stock. The firm’s analysis involved discussions with 11 partners in the ServiceNow ecosystem, aiming to gain a clearer understanding of the current demand environment, customer activity, product engagement, and the perceived impact of the planned acquisition of Moveworks. According to InvestingPro data, ServiceNow currently trades at $756, with analysts’ targets ranging from $716 to $1,426, suggesting significant upside potential despite recent market volatility.
The decision to lower the price target comes after ServiceNow was removed from the J.P. Morgan Analyst Focus List several months ago when the stock was slightly above $1,000 per share. Since the beginning of February, ServiceNow shares have seen a 26% decline, compared to an 18% drop in the IGV Index over the same timeframe. Despite the recent downturn, JPMorgan continues to support the long-term fundamentals of ServiceNow but has expressed caution due to potential impacts from the trade war and federal budget changes.
The feedback from partners indicates a mixed sentiment. Five out of 11 partners reported seeing ServiceNow projects or purchases being paused or deferred, citing the trade war or federal cutbacks as reasons. A more cautious approach to spending in the federal space was noted, with contracts being cut and spending mostly halted in Q1. Additionally, four partners observed a worsening business tone in Q1, with some clients constrained by budgets, delaying decisions or stalling digital transformation projects unless they were directly tied to operational KPIs or budget cuts. Despite these challenges, InvestingPro data shows ServiceNow maintains impressive financial health with a 79.18% gross profit margin and robust revenue growth of 22.44% over the last twelve months.
Despite these challenges, partners remain somewhat confident in ServiceNow’s growth potential, expecting close to 20% growth this year. They recognize ServiceNow as a "platform of platforms," with its broadening capabilities, although they also acknowledge that growth may be less driven by new customers and more affected by economic uncertainties.
The adoption of ServiceNow’s GenAI products is on the rise, with partners seeing significant growth potential and piloting the technology, indicating an early-stage boost. The announced intent to acquire Moveworks has been universally well-received among partners, who believe it will enhance the platform’s AI-driven employee support capabilities.
In summary, JPMorgan views ServiceNow’s diverse set of growth vectors and over $250 million in ARR from more than 12 organically built businesses as indicative of the company’s broader platform vision. The firm believes ServiceNow’s messaging on cost-savings and quick time-to-value deployment will resonate in the current challenging environment, as companies focus on the ROI of their software investments. The new December 2025 price target of $970 reflects a downward rerating of the peer group multiple. For deeper insights into ServiceNow’s valuation and growth prospects, InvestingPro subscribers can access comprehensive financial health scores, 14+ exclusive ProTips, and detailed analysis in the Pro Research Report, which transforms complex Wall Street data into actionable intelligence.
In other recent news, ServiceNow has been the focus of multiple analyst updates and adjustments. Cantor Fitzgerald reaffirmed its Overweight rating on ServiceNow, maintaining a price target of $1,048 and expressing a positive outlook despite near-term caution. The firm highlighted the necessity for ServiceNow to deliver a strong first-quarter 2025 report to support its valuation. TD Cowen also maintained a Buy rating but lowered its price target from $1,300 to $1,100, citing macroeconomic conditions and ongoing challenges related to the cryptocurrency Dogecoin. Oppenheimer reduced its price target for ServiceNow to $970 while keeping an Outperform rating, noting strong cost discipline and potential impacts from macro uncertainties. Goldman Sachs adjusted its price target to $1,050, reaffirming a Buy rating and anticipating a 20.2% growth in constant currency subscription revenue for the first quarter. Despite these challenges and market concerns, analysts remain optimistic about ServiceNow’s potential, particularly in its AI product cycle and strategic acquisitions like Moveworks. The company’s robust fundamentals and strong integration within enterprise IT infrastructure are seen as key strengths.
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