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Investing.com - Stifel raised its price target on ServiceNow (NYSE:NOW), a $210 billion market cap software giant currently trading at $1,005, to $1,200.00 from $1,050.00 on Thursday, while maintaining a Buy rating on the stock. According to InvestingPro data, the stock is currently trading above its Fair Value.
The price target increase follows ServiceNow’s strong performance, with the company reporting 21.5% constant currency current remaining performance obligation (cRPO) growth, which exceeded guidance by 200 basis points. This growth, supported by impressive 78.5% gross margins and a GOOD financial health score from InvestingPro, was driven by strong enterprise execution across all geographies and product lines, offsetting headwinds in the US Federal sector.
ServiceNow stock gained approximately 8% in after-hours trading as the company also reported better-than-expected profitability and cash flow. Management has maintained focus on operational discipline and is beginning to see sustained results from leveraging generative AI solutions.
The company’s generative AI solutions are expected to reach $350 million in calendar year 2025, with Stifel expecting these benefits to persist for many years to come.
Looking ahead, ServiceNow management guided third-quarter constant currency cRPO to 18%, maintaining a conservative outlook for the Federal business and accounting for a 200 basis point headwind from a large fourth-quarter renewal cohort. Analyst consensus remains strongly bullish, with price targets ranging from $734 to $1,300. Discover more insights with InvestingPro’s comprehensive research report.
In other recent news, ServiceNow reported strong second-quarter financial results, surpassing analyst expectations. The company achieved a non-GAAP earnings per share of $4.09, significantly higher than the consensus estimate of $3.57. Total (EPA:TTEF) revenue reached $3.215 billion, exceeding the forecast of $3.121 billion and marking a 22.4% year-over-year increase. Following these results, several analyst firms adjusted their price targets for ServiceNow. Mizuho (NYSE:MFG) and Needham both raised their price targets to $1,200, citing strong performance and growth in current remaining performance obligations (cRPO). Citi increased its price target to $1,234, highlighting the company’s momentum in AI. Meanwhile, UBS lowered its price target to $1,100, maintaining a cautious outlook despite the company’s solid performance. JMP Securities reiterated its Market Outperform rating with a $1,300 price target, emphasizing the company’s robust quarterly results. These developments reflect the varying perspectives of analysts on ServiceNow’s future prospects.
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