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On Thursday, Stifel analysts demonstrated confidence in ServiceNow shares (NYSE: NYSE:NOW), raising their price target to $975 from the previous $950, while maintaining a Buy rating on the stock. The adjustment followed ServiceNow’s impressive after-hours performance, where the stock soared approximately 10% due to its robust quarterly results. With a current market capitalization of $168.23 billion, ServiceNow stands as a prominent player in the software industry. According to InvestingPro data, analyst targets range from $716 to $1,426, reflecting diverse market expectations.
ServiceNow’s recent financial outcomes surpassed expectations, with a 22% constant currency (CC) growth in committed remaining performance obligations (cRPO), which is a significant measure of future revenue. This success was attributed to strong enterprise execution and a very healthy Federal business that saw a 30% increase, aligning with Stifel’s predictions. Additionally, the company enjoyed a slight boost from early renewals. The company’s impressive performance is reflected in its robust gross profit margin of 79.18% and revenue growth of 22.44% over the last twelve months. InvestingPro subscribers can access 12+ additional key metrics and insights about ServiceNow’s financial health.
The firm’s profitability and cash flow metrics also exceeded forecasts, benefiting from ServiceNow’s focus on operational discipline. The company’s utilization of generative AI solutions is starting to yield results, which Stifel anticipates will continue to contribute positively for many years ahead.
Looking to the future, ServiceNow’s management has projected a 19.5% growth in 2Q CC cRPO. They have also incorporated a conservative approach in their guidance by not fully accounting for the current favorable foreign exchange (F/X) conditions and by assuming no growth in Federal Net New Annual Contract Value (NNACV) for the year 2025.
Despite potential macroeconomic uncertainties, Stifel’s outlook on ServiceNow remains positive. The firm believes that ServiceNow is poised to maintain its strong growth and profitability, leveraging its platform across the software landscape. With an overall financial health score of "GOOD" from InvestingPro, and moderate debt levels, the company appears well-positioned for continued success. Discover comprehensive analysis and detailed metrics in ServiceNow’s Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, ServiceNow has reported strong first-quarter earnings for 2025, with non-GAAP earnings per share of $4.04, surpassing the consensus estimate of $3.83. The company also achieved revenue of $3.088 billion, slightly above the forecasted $3.084 billion, marking an 18.5% year-over-year increase. ServiceNow’s current remaining performance obligations (cRPO) stood at $10.310 billion, exceeding expectations and demonstrating a robust 22% growth. Analysts from JMP have reaffirmed a Market Outperform rating with a $1,300 price target following these results. Meanwhile, BMO Capital Markets has adjusted its price target for ServiceNow to $950 from $990, maintaining an Outperform rating amidst macroeconomic uncertainties.
ServiceNow has also entered a strategic partnership with Devoteam to enhance customer relationship management (CRM) across Europe, the Middle East, and Africa. This collaboration aims to leverage ServiceNow’s AI capabilities and Devoteam’s digital transformation expertise. However, ServiceNow faces challenges with product pricing and adoption rates, as noted by a system integrator in an interview with In Practise. Many customers consider the license costs high, and around half of the products remain unused a year after purchase. Despite these challenges, Evercore ISI has increased the stock target to $1,000, citing strong performance and strategic decisions.
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