ServiceNow price target lowered to $1,150 from $1,160 at BMO Capital

Investing.com - BMO Capital has lowered its price target on ServiceNow (NYSE:NOW) to $1,150 from $1,160 while maintaining an Outperform rating on the stock. The new target remains well above the current price of $946.81 and the analyst consensus high target of $1,300, according to InvestingPro data.

The firm cited ServiceNow’s solid September quarter performance, which included subscription revenue growth and operating margins that exceeded guidance when measured in constant currency. This performance aligns with the company’s impressive 78.5% gross profit margin and 21.1% year-over-year revenue growth over the last twelve months.

BMO Capital noted that ServiceNow’s fourth-quarter guidance of 17.5-18% year-over-year subscription revenue growth in constant currency was "a bit disappointing" compared to expectations.

Despite this slight guidance concern, the research firm highlighted ServiceNow’s "broad-based AI opportunities" and "mature AI portfolio" as factors that can support durable growth for the company.

The price target reduction reflects "modestly more conservative multiple assumptions" in BMO Capital’s valuation model, though the firm remains bullish on ServiceNow’s overall prospects.

In other recent news, ServiceNow reported strong third-quarter performance, showcasing a 20.5% year-over-year growth in subscription revenue on a constant currency basis, surpassing expectations by 1 percentage point. The company’s current remaining performance obligations (cRPO) also increased by 20.5%, exceeding forecasts by 2.5 percentage points. Analysts have taken note of these results, with Wells Fargo raising its price target to $1,275, citing higher estimates due to ServiceNow’s updated 2025 guidance. TD Cowen also raised its price target to $1,250, highlighting the company’s significant cRPO growth. RBC Capital maintained its Outperform rating, pointing out the strong demand in ServiceNow’s U.S. Federal business segment and AI momentum. Piper Sandler reiterated an Overweight rating, noting a 30% growth in Federal Net New Annual Contract Value and projecting $500 million in Now Assist Annual Contract Value by year-end. Wolfe Research also reiterated an Outperform rating, emphasizing ServiceNow’s solid results despite concerns about a government shutdown.

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