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On Thursday, TD Cowen maintained a positive outlook on ServiceNow (NYSE:NOW) shares, reiterating a Buy rating alongside a steadfast $1,100.00 price target. The financial firm’s analysis highlighted ServiceNow’s robust first quarter performance, which showcased an impressive balancing act between growth preservation and a more cautious guidance approach. According to InvestingPro data, ServiceNow commands a substantial market capitalization of $192.69 billion, with analyst targets ranging from $716 to $1,300, reflecting diverse market expectations.
ServiceNow reported notable upside in its 1Q committed remaining performance obligations (cRPO), which provided management the flexibility to incorporate greater conservatism into its projections for the U.S. Federal business for the remainder of fiscal year 2025. Despite this adjustment, the company has maintained the lower end of its 19.5-20% constant currency growth guidance. The company’s strong execution is evident in its impressive 79.18% gross profit margin and actual revenue growth of 22.44% over the last twelve months, as reported by InvestingPro.
TD Cowen’s endorsement comes with the view that ServiceNow has significantly mitigated the risks associated with federal business uncertainties, while concurrently reinforcing investor confidence in the company’s ability to sustain growth. The firm also observed that ServiceNow’s artificial intelligence (AI) product offerings continue to exhibit strong momentum in the market. While currently trading above its InvestingPro Fair Value, the company maintains a GOOD financial health score, with 12 additional ProTips available to subscribers examining its valuation and growth metrics in detail. Access the comprehensive Pro Research Report for deeper insights into ServiceNow’s market position and future potential.
The analyst’s commentary emphasized the company’s strategic management decisions, stating, "NOW delivered impressive 1Q cRPO upside. This enabled management to add greater conservatism in its US Fed business through the rest of FY25 while still holding the bottom-end of its +19.5-20% cc growth guide. We think this materially reduces the Fed overhang while still inducing confidence in growth durability. And data points suggest that its AI product cycle momentum remains strong. Reiterate Buy."
ServiceNow’s ability to de-risk its guidance while still committing to significant growth targets reflects a prudent approach to business planning in a complex market environment. With TD Cowen’s continued endorsement, ServiceNow’s stock remains a focal point for investors seeking resilient growth potential backed by strong product performance.
In other recent news, ServiceNow reported first-quarter results that exceeded expectations, showcasing significant growth in its remaining performance obligations (RPO) and current RPO (cRPO), with notable increases of 25% and 22% respectively. This robust performance was driven by strong federal contract wins and expansion in large customer contracts, as well as the adoption of AI technologies. Following these results, several analyst firms adjusted their ratings and price targets for ServiceNow. Cantor Fitzgerald reaffirmed an Overweight rating with a price target of $1,048, while Piper Sandler maintained an Overweight rating but reduced the price target to $1,120. Mizuho (NYSE:MFG) Securities raised its price target to $1,025, citing strong demand for ServiceNow’s GenAI product suite and Professional Plus deals. Truist Securities maintained a Hold rating with a price target of $950, expressing caution due to macroeconomic uncertainties despite enthusiasm for upcoming products. Canaccord Genuity increased its price target to $1,075 and reiterated a Buy rating, highlighting ServiceNow’s consistent top-line growth and free cash flow margins. These developments reflect a mixed but generally positive outlook for ServiceNow, as the company continues to navigate economic challenges while expanding its product offerings.
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