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On Thursday, Needham analysts revised their price target for ServiceNow (NYSE:NOW) shares, reducing it from $1,500.00 to $1,200.00 while maintaining a Buy rating. Currently trading at $1,143.63, the stock remains near its 52-week high of $1,198.09, with InvestingPro data showing the company commands a substantial market capitalization of $236 billion. The adjustment follows ServiceNow’s announcement regarding its shift to Consumption-based monetization expected to launch in calendar year 2025 (CY25). Needham analysts commended the company’s strategic pivot, emphasizing that the new President, Chief Product Officer and Chief Operating Officer Amit Zavery’s perspective is instrumental in exploring innovative monetization strategies. This move is particularly relevant as the company’s Agentic AI aims to move away from the conventional Seat-based sales model.
ServiceNow also hinted at forthcoming go-to-market strategies and the development of more cohesive solutions. These topics are slated to be further elaborated at the Knowledge 2025 event in May. Needham’s analysts expressed their continued confidence in ServiceNow, suggesting that despite an initial drop in after-hours trading—attributed to a subdued reaction to the fourth quarter CY24 performance and larger than anticipated foreign exchange headwinds—the firm is well-positioned for potential outperformance throughout the year. This confidence appears well-founded, as InvestingPro analysis reveals impressive financial metrics, including a robust gross profit margin of 79.2% and strong revenue growth of 22.4% over the last twelve months.
The revised price target of $1,200.00 is based on an enterprise value to sales (EV/Sales) multiple of 18.9 times Needham’s CY25 revenue estimate for ServiceNow. The analysts’ commentary highlighted the company’s adaptability and forward-looking approach to business, which they believe will support ServiceNow’s growth and market position in the upcoming year.
Investors and market watchers are now anticipating the Knowledge 2025 event, where ServiceNow is expected to share more details on its strategic initiatives and integrated solutions, potentially providing further insights into the company’s future direction and financial prospects. For investors seeking deeper analysis, InvestingPro offers comprehensive research reports and additional insights, including 17 exclusive ProTips and detailed financial health metrics, which currently rate ServiceNow’s overall financial health as "GREAT" with a score of 3.21 out of 5.
In other recent news, ServiceNow has seen a flurry of activity. The company reported a 21% year-over-year increase in both subscription and total revenues for the fourth quarter of 2024, amounting to $2,866 million and $2,957 million respectively. Bernstein SocGen Group raised ServiceNow’s stock price target to $1,021 while maintaining an Outperform rating. Meanwhile, JMP Securities reaffirmed their Market Outperform rating, maintaining a price target of $1,300.
ServiceNow also announced a number of strategic partnerships and product enhancements. The company unveiled its AI Agent Orchestrator, designed to streamline enterprise operations. ServiceNow expanded its collaboration with Google (NASDAQ:GOOGL) Cloud and entered a partnership with Visa (NYSE:V) to modernize Visa’s Dispute Management Service using its AI technology.
These recent developments highlight ServiceNow’s continuous growth and innovation. Analysts from firms such as Cantor Fitzgerald, TD Cowen, and Goldman Sachs have expressed positive outlooks on the company. These insights provide a snapshot of ServiceNow’s recent performance and strategic initiatives.
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