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

Investing.com - BMO Capital has raised its price target on ServiceNow (NYSE:NOW) to $1,160 from $1,150 while maintaining an Outperform rating on the stock. The company, currently trading at $996.18, has demonstrated impressive gross profit margins of 78.5% according to InvestingPro data.

The firm noted that sales trends were modestly below expectations in the second quarter and quarter-to-date, and ServiceNow had tempered its 2025 comp outlook.

Despite these challenges, BMO Capital highlighted that earnings per share of $0.33 achieved consensus due to cost favorability, and comp trends accelerated in June and July with positive comps and transactions.

The analyst firm acknowledged a slightly slower than expected pace of improvement but expressed confidence in continued comp acceleration as easier comparisons combine with a more aggressive sales approach.

BMO Capital believes ServiceNow shares offer an attractive opportunity despite heightened negative sentiment and a trough post-food safety price-to-earnings multiple, as the company’s improving fundamental trajectory continues to develop.

In other recent news, ServiceNow has reported strong financial performance, with its current remaining performance obligations growing by 21.5% on a constant currency basis, surpassing expectations by about 200 basis points. This positive outcome has led both TD Cowen and RBC Capital to raise their price targets for ServiceNow to $1,200, with TD Cowen maintaining a Buy rating and RBC Capital an Outperform rating. Additionally, ServiceNow has secured a significant $1.2 billion cloud-computing deal with Google (NASDAQ:GOOGL) over five years, marking a major win for Google’s cloud services.

KeyBanc has reiterated its Sector Weight rating on ServiceNow, acknowledging the company’s strong quarterly results amidst market concerns. Despite underperforming the IGV index recently, ServiceNow’s performance has been noted for overcoming challenges such as weak government spending data. Meanwhile, NowVertical Group is set to showcase its AI solutions at the Qlik AI Reality Tour event in São Paulo, Brazil, following its recognition as Qlik’s 2024 Latin America Channel Growth Partner of the Year. These developments highlight ServiceNow’s robust financial health and strategic partnerships in the tech industry.

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