ServiceNow stock price target raised to $1,025 by BMO Capital

On Thursday, BMO Capital Markets maintained a positive outlook on ServiceNow (NYSE:NOW) shares, with analyst Keith Bachman increasing the company’s price target from $950.00 to $1,025.00 while keeping an Outperform rating on the stock. The company, currently valued at $193 billion, has demonstrated impressive financial strength with a gross profit margin of 79.18% and robust revenue growth of 22.44% over the last twelve months. According to InvestingPro analysis, ServiceNow stands as a prominent player in the software industry, though current valuations suggest the stock may be trading above its Fair Value. In his analysis, Bachman highlighted ServiceNow’s strong performance in the current reporting period, particularly noting the company’s solid Commitment to Future Revenue Performance (CRPO) results.

The analyst pointed out that ServiceNow exceeded expectations with its March quarter CRPO outcomes and provided an optimistic guide for the June quarter, both surpassing BMO’s initial projections. However, he also mentioned that second-half CRPO estimates have been adjusted downwards. Despite this, Bachman believes the company’s unique and evolving platform, combined with a strong quarter and a slight reduction in future subscription revenue expectations, will continue to bolster the stock’s performance. InvestingPro data reveals the company generated $3.4 billion in levered free cash flow over the last twelve months, operating with a moderate debt level and maintaining a healthy current ratio of 1.1.

According to Bachman, the lowered subscription revenue forecast for the upcoming three quarters represents approximately 4% of the company’s revenues not being sourced from the balance sheet. He sees this adjustment as a prudent move by management, which could help sustain investor confidence in the company’s shares.

ServiceNow’s differentiated offerings and expanding platform were also cited as key factors that could support the stock going forward. With the revised price target, BMO Capital Markets signals its belief in the company’s ability to maintain its growth trajectory and market position.

The analyst’s comments reflect a broader sentiment that, despite a modest recalibration of expectations, ServiceNow’s solid quarter results and forward-looking guidance are indicative of its continued potential for robust performance in the market.

In other recent news, ServiceNow has reported impressive first-quarter earnings, surpassing expectations and demonstrating strong growth across various sectors. The company achieved notable increases in its remaining performance obligations, with a 25% growth rate, and a significant 30% rise in new annual contract value. These results have led to positive analyst reactions, with RBC Capital Markets raising its price target to $1,060 and maintaining an Outperform rating due to ServiceNow’s strong execution and AI momentum. TD Cowen also reiterated a Buy rating, with a steadfast $1,100 price target, emphasizing the company’s ability to manage growth amidst federal business uncertainties.

Furthermore, Cantor Fitzgerald reaffirmed an Overweight rating and held its price target at $1,048, citing ServiceNow’s robust first-quarter results and expansion into new workflow areas. Despite the positive earnings report, Truist Securities maintained a Hold rating with a $950 price target, highlighting macroeconomic uncertainties and the cautious stance of the company. Meanwhile, Piper Sandler adjusted its price target to $1,120 from $1,200 but maintained an Overweight rating, noting ServiceNow’s strong performance and momentum in AI and CRM technologies.

Overall, ServiceNow’s recent financial outcomes and strategic advancements have garnered positive attention from various analyst firms, reflecting confidence in the company’s growth trajectory. Investors are particularly focused on the company’s upcoming events, such as the Knowledge conference and Financial Analyst Day, for further insights into its strategic initiatives. The company’s ability to navigate economic uncertainties while maintaining growth potential remains a key point of interest for stakeholders.

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