U.S. stocks edge higher; solid earnings season continues
On Tuesday, ServiceNow (NYSE:NOW), currently trading at $812.36 and valued at nearly $168 billion, maintained its Overweight rating and a $1,048.00 price target from analysts at Cantor Fitzgerald. According to InvestingPro data, the stock has seen significant pressure recently, declining over 26% year-to-date, suggesting a potential opportunity for investors. The firm’s analysts highlighted ServiceNow’s recent agreement to acquire Moveworks, an Agentic AI Assistant company, for $2.85 billion in a cash and stock deal. This transaction represents the largest acquisition in ServiceNow’s history and is anticipated to be finalized in the second half of 2025. With impressive gross profit margins of 79% and robust revenue growth of 22% in the last twelve months, ServiceNow appears well-positioned to integrate this significant acquisition alongside its previous AI purchases, Cuein and Quality 360.
The acquisition of Moveworks, which achieved over $100 million in Annual Recurring Revenue (ARR) by September 2024, is valued at approximately 28.5 times trailing twelve months ARR. This strategic move is set to enhance ServiceNow’s existing agentic AI and automation capabilities by integrating Moveworks’ front-end AI assistant and enterprise search technology. The goal is to fortify ServiceNow’s agentic functionality with a robust universal AI assistant and an advanced AI-based enterprise search to quickly respond to requests, automate daily tasks, and improve overall productivity.
Moveworks currently serves more than 350 large enterprise clients, including 10% of the Fortune 500, with 250 of these being mutual customers with ServiceNow. In addition to the acquisition news, ServiceNow also provided an update on its Pro Plus SKU, which surpassed $200 million in Annual Contract Value (ACV) as of December 31, 2024, and now boasts approximately 1,000 AI customers. The acquisition and these milestones underscore ServiceNow’s commitment to expanding its AI capabilities and customer base. InvestingPro analysis reveals the company maintains a strong financial health score, with 16 additional ProTips available to subscribers, offering deeper insights into ServiceNow’s growth trajectory and market position.
In other recent news, ServiceNow has made a significant move by acquiring Moveworks, an AI assistant and enterprise search platform company, for $2.85 billion in cash and stock. This acquisition is expected to enhance ServiceNow’s capabilities in AI and automation, with the potential to expand its market reach and influence. Analysts have provided mixed reactions; Stifel has reiterated a Buy rating with a $1,175 target, while UBS has lowered its price target to $1,000 but maintained a Buy rating. RBC Capital also adjusted its price target to $986, endorsing the stock with an Outperform rating, and JMP reaffirmed a $1,300 target, maintaining a Market Outperform rating.
The acquisition is seen as a strategic fit, potentially boosting ServiceNow’s AI offerings and allowing entry into the enterprise search market. Goldman Sachs has maintained a Buy rating with a $1,200 target, highlighting the strategic value of the acquisition in enhancing ServiceNow’s Now Assist offerings. Despite varying price targets, analysts generally see the acquisition as a positive step for ServiceNow’s growth trajectory. The company aims to integrate Moveworks’ technology to strengthen its position in customer relationship management and automation sectors. These developments reflect ServiceNow’s commitment to leveraging AI advancements to maintain its competitive edge in the enterprise software market.
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