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Tuesday, ServiceNow (NYSE:NOW) shares maintained their Buy rating and $1,050.00 price target from Needham analysts, with the stock currently trading at $978.05. According to InvestingPro data, the company maintains an overall "GREAT" financial health score, with analyst targets ranging from $724 to $1,300. The endorsement followed ServiceNow’s Financial Analyst Day (FAD25) in Las Vegas, where the company’s management confirmed their guidance for the calendar year 2025 (CY25) and did not alter their targets for calendar year 2026 (CY26), despite facing a $200 million foreign exchange headwind. They expect subscription revenue to surpass $15 billion, building on their impressive current revenue of $11.47 billion.
Looking further ahead, ServiceNow anticipates an increase in both operating and free cash flow margins by 100 basis points by calendar year 2027 (CY27). The company continues to prioritize growth, maintaining impressive gross profit margins of 78.92% and strong revenue growth of 21.01% over the last twelve months. Analysts at Needham believe ServiceNow is becoming more adept at finding new ways to expand its margins, especially as it implements General AI (GenAI) use-cases internally. Get deeper insights into ServiceNow’s financial metrics and 15+ additional ProTips with an InvestingPro subscription.
ServiceNow’s management highlighted the tangible benefits of their AI investments, noting that they are now realizing over $350 million in enterprise value from AI applications. Needham analysts view ServiceNow as a "safe haven" in the current market environment. They also regard the outcomes of FAD25 positively, indicating that the event managed to surpass the expectations that were not formally set by the investment community.
Investors and analysts often look to events like FAD25 for insights into a company’s future strategy and financial health. ServiceNow’s reaffirmation of its financial targets and its focus on margin expansion through AI integration appear to have reinforced Needham’s confidence in the company’s stock. The analysts’ continued support signals their belief in ServiceNow’s stability and potential for growth amidst market uncertainties.
In other recent news, ServiceNow has seen a series of significant developments. Erste Group upgraded ServiceNow’s stock rating from Hold to Buy, driven by positive revenue projections and expected growth in subscription-based software revenues. The company anticipates a rise of 19% to 19.5% in the second quarter, with a target of approximately $12.7 billion in software revenues for the year. UBS also raised its price target for ServiceNow to $1,025, maintaining a Buy rating, despite a slight reduction in the company’s 2025 subscription revenue growth forecast. This adjustment was made in response to broader economic pressures, yet UBS remains confident in ServiceNow’s potential.
Goldman Sachs and Truist Securities both reiterated their Buy ratings for ServiceNow, with price targets of $1,150 and $1,200, respectively. These firms highlighted ServiceNow’s strategic use of artificial intelligence and expansion into broader applications beyond IT-centric workflows. ServiceNow’s focus on AI and data integration is seen as expanding its total addressable market and enhancing its growth trajectory. Additionally, ServiceNow’s recent Financial Analyst Day presentation impressed analysts, showcasing the company’s leadership in AI product adoption and internal AI technology use. These developments underscore ServiceNow’s strategic positioning and potential for continued growth in the tech industry.
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