ServiceNow shares outpace market with 42% 12-month gain, price target raised

On Tuesday, JMP Securities increased its price target for ServiceNow (NYSE:NOW) shares, raising the figure from $1,000 to $1,300 while maintaining a Market Outperform rating. The adjustment comes after the firm conducted thorough channel checks and due diligence.

According to InvestingPro data, ServiceNow maintains excellent financial health with a "GREAT" overall score, supported by impressive gross profit margins of 79.2%. The research highlighted several positive indicators for ServiceNow, including a significant federal contract award.

ServiceNow recently secured its largest federal contract to date, a $198 million award from the Department of the Treasury, which was finalized on December 12. This milestone is one of the eight positive data points cited by JMP Securities that support their optimistic outlook on the company's stock performance. The company's strong execution is reflected in its robust 23.5% revenue growth and $3.4 billion in levered free cash flow over the last twelve months.

The analyst's commentary pointed out ServiceNow's stock has risen by 1% since the beginning of the year and has seen a substantial 42% increase over the past 12 months. This performance is notably stronger than that of the Russell 3000 index, which has increased by 2% year to date and 26% over the last year.

ServiceNow's robust financial performance and strategic contract wins have positioned the company favorably in the market. The stock's impressive year-over-year growth reflects the company's resilience and potential for continued success in the technology sector.

Investors and market watchers are likely to keep a close eye on ServiceNow's progress, as the raised price target suggests a confident outlook for the company's future financial performance. The recent developments and the stock's strong historical performance provide a solid foundation for JMP Securities' positive rating.

In other recent news, ServiceNow has announced plans to acquire Cuein, an AI-driven conversation data analysis firm, with the deal expected to close in the first quarter of 2025. The integration of Cuein's platform is anticipated to enhance ServiceNow's Workflow Data Fabric technology, aligning with the company's strong growth trajectory, which has seen a 23.48% revenue growth over the last twelve months.

Barclays (LON:BARC) has maintained an Overweight rating for ServiceNow, demonstrating confidence in the company's continued growth and ability to integrate new technologies. Cantor Fitzgerald and Evercore ISI analysts have also expressed optimism towards ServiceNow, initiating an Overweight rating and maintaining an Outperform rating respectively. Stifel analysts have likewise maintained their Buy rating on ServiceNow shares, based on solid enterprise deal activity reported by System Integrator contacts.

These developments have occurred concurrently with ServiceNow's strategic investments in its cloud datacenter infrastructure to support growth. The company's robust financial performance, with a gross profit margin of 79.24%, has been recognized by several financial firms, including Piper Sandler, which has increased its price target on ServiceNow shares.

These recent developments highlight ServiceNow's commitment to innovation and expansion, with the acquisition of Cuein expected to expedite the company's agentic AI roadmap.

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