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On Monday, ServiceNow (NYSE:NOW), a prominent player in the software industry with annual revenue of $10.98 billion, announced its largest acquisition to date, agreeing to purchase Moveworks, an AI assistant and enterprise search platform company, for $2.85 billion in cash and stock. Following this announcement, Stifel analysts reiterated their Buy rating and $1,175.00 price target for ServiceNow stock. According to InvestingPro analysis, the company’s current valuation appears to be near its Fair Value, with impressive gross profit margins of 79%.
The acquisition is significant as it enables ServiceNow to extend its Assist/Agent capabilities, which have traditionally focused on backend agents fulfilling tickets, to now include front-end requestors. This move not only expands ServiceNow’s serviceable addressable market by reaching more end users but also propels the company into the enterprise search market. With a solid financial health score of "GOOD" from InvestingPro, which offers 16 additional exclusive insights about ServiceNow, the company appears well-positioned to execute this strategic expansion.
Stifel analysts believe the acquisition will broaden ServiceNow’s total addressable market, enhancing the company’s agentic workflows and offering a new entry point into enterprise search. Although the fiscal contribution to FY26 subscription revenue remains uncertain, ServiceNow management has reiterated their target of over $15 billion in subscription revenue by FY26, emphasizing that this figure is based on organic growth.
The deal is a strategic step for ServiceNow, marking a significant expansion of its capabilities and market reach. ServiceNow’s foray into the enterprise search space, coupled with an expanded serviceable market, positions the company to potentially increase its market share and influence in the industry.
Investors and stakeholders in ServiceNow will be watching closely to see how the integration of Moveworks’ technology will enhance ServiceNow’s existing offerings and drive growth towards the company’s ambitious revenue target for FY26. The stock has experienced a significant 13.49% decline over the past week, potentially creating an interesting entry point for investors. For deeper insights into ServiceNow’s valuation and growth prospects, including exclusive financial metrics and expert analysis, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, ServiceNow has announced its acquisition of Moveworks, an AI firm, for $2.85 billion, combining cash and stock. This strategic move aims to enhance ServiceNow’s AI capabilities, particularly in customer relationship management and workflow automation. Despite the acquisition, ServiceNow maintains its margin targets and has reported surpassing $200 million in Pro Plus Annual Contract Value in the fourth quarter, exceeding estimates by over 10%. Analysts have responded with mixed adjustments to ServiceNow’s stock price targets. UBS reduced its target to $1,000 while maintaining a Buy rating, and RBC Capital cut its target to $986 but upheld an Outperform rating. JMP analysts reaffirmed a $1,300 target, citing consistent revenue growth projections. Goldman Sachs maintained a $1,200 target, expressing confidence in the acquisition’s strategic value. Meanwhile, Mizuho (NYSE:MFG) lowered its target to $1,100, still endorsing an Outperform rating. These developments reflect ServiceNow’s ongoing efforts to strengthen its position in the competitive AI and automation markets.
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