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Investing.com - ServiceNow (NYSE:NOW), the $205.7 billion software giant, saw its stock gain to $994.69 after KeyBanc maintained its Sector Weight rating on the company, noting that strong quarterly performance helped overcome recent market concerns. According to InvestingPro data, the company maintains impressive gross profit margins of 78.5%.
KeyBanc analyst Jackson Ader pointed out that ServiceNow had underperformed the IGV index by approximately 9% month-to-date, dropping 7% through the recent close compared to the IGV’s 2% gain. Early July saw increasing concerns about weak government spending data and elongating deal cycles for U.S. public sector customers. Despite market volatility, InvestingPro analysis shows the company achieved robust revenue growth of 21.1% over the last twelve months.
The company’s quarterly results largely addressed these worries, with subscription revenue and cRPO both growing 200 basis points above guidance on a constant currency basis. Operating margin also significantly exceeded expectations, which management partially attributed to ServiceNow’s own AI implementation that saved approximately $100 million in run-rate spending on headcount.
ServiceNow raised its guidance following the strong results, though KeyBanc noted the updated outlook "isn’t overly aggressive," positioning the company to maintain its current valuation.
Despite acknowledging "a good quarter," KeyBanc maintained its neutral Sector Weight rating on ServiceNow shares, indicating some lingering concerns remain despite the positive performance. InvestingPro analysis suggests the stock is slightly overvalued at current levels, trading at a P/E ratio of 132.3, though maintaining a "GOOD" overall financial health score. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report for deeper insights into ServiceNow’s valuation and growth prospects.
In other recent news, ServiceNow has reported strong second-quarter 2025 results, exceeding expectations across various financial metrics. The company achieved 21.5% growth in constant currency current remaining performance obligations (cRPO), surpassing its guidance by 200 basis points. This performance has led to several analyst firms adjusting their price targets for ServiceNow. Piper Sandler raised its price target to $1,150, citing solid execution and robust AI-related demand. Cantor Fitzgerald reiterated an Overweight rating with a $1,200 price target after describing the quarter as impressive. Stifel also increased its price target to $1,200, highlighting strong enterprise execution across geographies and product lines. Mizuho (NYSE:MFG) followed suit, raising its target to $1,200, noting the company’s ability to exceed both guidance and market expectations. However, UBS lowered its price target to $1,100, maintaining a Buy rating due to a cautious outlook despite the strong quarterly results.
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