Mizuho cuts ServiceNow stock price target to $1,100

On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on ServiceNow (NYSE:NOW) shares, reducing the price target to $1,100 from $1,210, while reaffirming an Outperform rating. According to InvestingPro data, analysts’ targets for ServiceNow currently range from $716 to $1,426, reflecting diverse market expectations for this prominent software industry player. The revision follows ServiceNow’s announcement of its acquisition of Moveworks, an AI firm specializing in employee assistance across various business systems. The deal, valued at $2.85 billion, is set to bolster ServiceNow’s AI capabilities and expand its existing customer base’s access to Moveworks’ advanced search technology.

ServiceNow’s recent acquisition is perceived as a strategic move to enhance its position in the AI sector. Despite the considerable investment, which analysts suggest could be more than 20 times Moveworks’ current Annual Recurring Revenue (ARR), the addition of Moveworks is expected to contribute positively to ServiceNow’s AI monetization efforts. The company’s strong financial position, with impressive gross profit margins of 79.2% and healthy cash flows, suggests it can effectively manage this significant investment. This move aligns with the company’s growth trajectory, which is supported by the increasing demand for workflow automation and the potential for cross-selling.

In addition to the acquisition news, ServiceNow disclosed that it had surpassed $200 million in Pro Plus Annual Contract Value (ACV) during the fourth quarter, outperforming estimates by more than 10%. This milestone is particularly noteworthy as it addresses previous concerns regarding the company’s transparency in reporting. The strong performance in the fourth quarter adds to the confidence in ServiceNow’s future growth prospects.

Mizuho’s reassessment of ServiceNow’s price target reflects broader market trends, including a compression in comparable company multiples. However, the firm maintains a positive outlook on ServiceNow’s shares, citing the company’s robust positioning for sustained high growth. This optimism is underpinned by the ongoing demand for workflow automation solutions, lucrative cross-selling opportunities, and the potential for increased AI monetization.

In summary, while Mizuho has reduced the price target for ServiceNow, the firm continues to endorse the stock with an Outperform rating. ServiceNow’s strategic acquisition of Moveworks and its strong financial performance in the fourth quarter contribute to the company’s favorable prospects in the expanding market for AI and workflow automation. With revenue growing at 22.4% and a robust market position, ServiceNow demonstrates significant potential. For deeper insights into ServiceNow’s valuation and growth prospects, including 17 additional ProTips and comprehensive financial analysis, visit InvestingPro.

In other recent news, ServiceNow has announced its definitive agreement to acquire AI firm Moveworks for $2.85 billion in a deal payable in cash and stock, expected to close in the second half of 2025. This acquisition is aimed at enhancing ServiceNow’s AI-driven enterprise search capabilities and front-end AI assistants for self-service automation. Despite the strategic intent behind the acquisition, the announcement led to a 5.5% drop in ServiceNow’s stock, reflecting investor concerns about the deal’s valuation and its immediate impact on the company’s financials.

Analysts from Evercore ISI and Canaccord Genuity have maintained positive outlooks on ServiceNow, with price targets set at $1,150 and $1,275, respectively, highlighting the company’s growth trajectory and strategic direction. Evercore ISI projected an approximate $300 million increase in Annual Recurring Revenue by the end of 2025, while Canaccord emphasized the acquisition’s alignment with ServiceNow’s AI strategy. Bernstein analysts also reiterated an Outperform rating with a $1,021 price target, noting ServiceNow’s solid performance in the software sector.

ServiceNow’s executive, Amit Zavery, expressed optimism about the acquisition, stating it will "supercharge enterprise-wide AI adoption." The integration of Moveworks’ technology is expected to bolster ServiceNow’s offerings across various workflows, including sales, CRM, finance, HR, and IT. As the acquisition progresses, investors will closely monitor its impact on ServiceNow’s financial performance and market positioning in the competitive enterprise AI field.

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