ServiceNow stock price target raised to $1,200 from $1,150 at TD Cowen

Investing.com - TD Cowen raised its price target on ServiceNow (NYSE:NOW) to $1,200 from $1,150 while maintaining a Buy rating on the stock. According to InvestingPro data, ServiceNow currently trades at a P/E ratio of 133.3x, reflecting its premium positioning in the software industry.

The firm cited ServiceNow’s strong second-quarter performance, which showed current remaining performance obligations (cRPO) growth of 21.5% on a constant currency basis, beating expectations by approximately 200 basis points. The company maintains impressive gross profit margins of 78.5% and has achieved revenue growth of 21.1% over the last twelve months.

TD Cowen noted this outperformance came despite tougher federal spending conditions, with early renewals and artificial intelligence strength in the enterprise segment helping to drive results.

The analyst report highlighted continued adoption of ServiceNow’s Pro+ and Data SKUs "across the board" as positive factors in the company’s performance.

TD Cowen views ServiceNow as "the best positioned SaaS vendor to monetize GenAI" and expects momentum to continue building in the second half of the year.

In other recent news, ServiceNow has secured a significant $1.2 billion cloud-computing deal with Google (NASDAQ:GOOGL), spanning five years. This agreement marks a substantial achievement for Google Cloud as it vies with Amazon (NASDAQ:AMZN) Web Services and Microsoft (NASDAQ:MSFT) Azure for enterprise clients. Additionally, RBC Capital has raised its price target for ServiceNow to $1,200 from $1,100, maintaining an Outperform rating. The firm attributed this to ServiceNow’s impressive quarterly performance, which surpassed high investor expectations despite ongoing macroeconomic challenges. Piper Sandler also increased its price target for ServiceNow to $1,150 from $1,120, citing the company’s strong quarterly results and robust AI-related demand. Meanwhile, KeyBanc reiterated its Sector Weight rating on ServiceNow, acknowledging the company’s strong performance amid market concerns. Furthermore, NowVertical Group Inc. announced its participation in the Qlik AI Reality Tour event in Brazil, following its recognition as Qlik’s 2024 Latin America Channel Growth Partner of the Year.

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