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On Tuesday, Stifel analysts increased their price target for ServiceNow (NYSE:NOW) shares to $1,050 from the previous target of $975, while reiterating a Buy rating on the stock. Currently trading at $973.85, the company commands a market capitalization of $201.8 billion and trades at a P/E ratio of 130.5x. According to InvestingPro analysis, the stock appears slightly overvalued based on its Fair Value calculations. Stifel’s Brad R. Reback shared insights following the attendance of ServiceNow’s analyst day and Knowledge 2025 user conference in Las Vegas. The spotlight was on ServiceNow’s genAI strategy and its adoption metrics, as well as the company’s accelerated growth beyond its core IT offerings and potential for increasing margins.
Reback noted that although ServiceNow’s management did not revise their long-term subscription revenue forecasts, they emphasized the potential for margin growth. This expansion is expected to stem from a mix of scaling leverage and the use of AI to enhance operational efficiencies. The company already demonstrates impressive profitability with a gross margin of 78.9% and has maintained strong revenue growth of 21% over the last twelve months. The focus of the company, as per Reback’s observation, continues to be on organic growth and strategic, smaller-scale mergers and acquisitions.
The analyst day event underscored ServiceNow’s solid positioning to continue the upward trajectory of its comprehensive enterprise engagement platform, which extends well beyond IT services. Reback expressed confidence that ServiceNow is poised to maintain approximately 20% revenue growth. This growth, coupled with the identified margin expansion opportunities, is projected to result in operating income (OI) and free cash flow (FCF) increasing at a faster rate than revenue in the upcoming years. With an "GREAT" Financial Health score from InvestingPro, which offers 15 additional exclusive ProTips and a comprehensive Pro Research Report for deeper analysis, the company appears well-positioned for continued success.
In other recent news, ServiceNow has been the focus of several analyst evaluations following its Financial Analyst Day and various strategic events. The company has reaffirmed its financial targets for 2026, including a subscription revenue goal exceeding $15 billion, and introduced a new target for a 100 basis point EBIT/FCF margin expansion by 2027. Analysts from TD Cowen have maintained a Buy rating with a price target of $1,100, emphasizing ServiceNow’s leadership in monetizing General AI within the SaaS sector. RBC Capital Markets also raised its price target to $1,100, citing ServiceNow’s unique position in agentic AI and its successful monetization of GenAI technologies.
BMO Capital Markets retained an Outperform rating with a $1,025 target, highlighting ServiceNow’s strategic focus on expanding its AI capabilities to drive growth. Meanwhile, JMP Securities set a $1,300 price target, noting the company’s strong market presence and valuation metrics. Oppenheimer analysts increased their target to $1,100, underscoring ServiceNow’s robust sales execution and its potential to achieve significant milestones in its AI segment. These developments reflect a positive outlook from analysts, with ServiceNow’s strategic initiatives and financial goals gaining attention in the investment community.
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