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Investing.com - Stifel has reiterated its Buy rating and $1,200.00 price target on ServiceNow (NYSE:NOW), currently trading at $886.75 with a market capitalization of $184 billion, citing improved federal business performance in the current quarter. According to InvestingPro data, the company maintains impressive gross profit margins of 78.5% and has demonstrated strong revenue growth of 21.1% over the last twelve months.
The research firm’s analysis of federal spending data through August 20 suggests ServiceNow’s federal business is trending up mid-single digits in the third quarter, following what was likely a low double-digit decline in the second quarter. This recovery aligns with ServiceNow’s overall financial health, which InvestingPro rates as GOOD, supported by strong cash flows and moderate debt levels.
Stifel noted that while initial data appeared to show a downward trend, adjustments for Department of Defense contracts (which are often reported 90 days late) and the timing of a large Veterans Affairs renewal worth $124 million (up 16% year-over-year) revealed the positive trajectory.
The firm highlighted that ServiceNow’s second-quarter federal results were "lackluster" as government agencies dealt with fallout from various DOGE initiatives, making the current improvement particularly significant.
Stifel acknowledged that it’s still early in the quarter, with the majority of federal contract signings typically weighted toward the latter part of the period, but indicated these early results suggest ServiceNow could exceed its internal third-quarter U.S. federal expectations. Analyst consensus remains strongly bullish, with price targets ranging from $734 to $1,300. Discover more detailed insights and 15+ additional ProTips with a subscription to InvestingPro, including comprehensive valuation metrics and growth forecasts.
In other recent news, ServiceNow has been active with several significant developments. ServiceNow and Salesforce are reportedly in advanced talks to invest $1.5 billion in Genesys Cloud Services, with each company contributing approximately $750 million. This investment would value Genesys at around $15 billion. Meanwhile, ServiceNow has launched a training program in Brazil in partnership with SENAI-SP, aiming to equip individuals with AI and digital workflow skills. Additionally, ServiceNow has formed a technology partnership with the DFL Deutsche Fußball Liga to enhance fan experiences in Germany’s top football leagues through improved business workflows. Analyst firm JMP Securities has maintained its Market Outperform rating and a $1,300 price target for ServiceNow after a visit to the company’s headquarters, citing its AI products. These recent developments highlight ServiceNow’s ongoing initiatives and partnerships in the technology and AI sectors.
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