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On Wednesday, TD Cowen adjusted its outlook on ServiceNow (NYSE: NYSE:NOW), reducing the price target on the shares to $1,100 from the previous $1,300, while reaffirming a Buy rating on the stock. Currently trading at $814.95, the company commands a market capitalization of $168.92 billion and trades at an EV/EBITDA multiple of 81.82. Derrick Wood, an analyst at TD Cowen, provided insights ahead of the company’s first-quarter earnings report, which is scheduled for release on April 23, 2025. InvestingPro analysis shows the stock is currently trading near its Fair Value, with 13 additional key insights available to subscribers.
Wood anticipates that ServiceNow’s first-quarter results will align with expectations and follow the guidance provided, marking a deviation from the company’s usual pattern of surpassing estimates and raising forecasts. The company has maintained impressive growth with revenue increasing 22.44% over the last twelve months and an industry-leading gross profit margin of 79.18%. This change is attributed to the current macroeconomic conditions, which are thought to have a more subdued impact than some had feared. Despite mixed signals from partner checks, the overall sentiment remains relatively positive, considering the typical first-quarter seasonality and concerns surrounding the cryptocurrency Dogecoin (DOGE), which Wood notes as a persistent overhang on the stock.
The analyst remains optimistic about the potential benefits of ServiceNow’s artificial intelligence product cycle. However, he acknowledges the likelihood of near-term stock challenges continuing due to the DOGE situation. Wood’s commentary reflects a cautious yet hopeful stance, as he maintains the Buy rating but adjusts the price target to $1,100, which is approximately 43 times the expected enterprise value to calendar year 2026 free cash flow (EV/CY26E FCF). This new target considers the recent downward pressure on sector valuations.
ServiceNow’s stock has experienced a notable decline, dropping approximately 30% since its peak in January. The shares are currently trading at around 31 times the EV/CY26E FCF. The analyst suggests that a first-quarter performance that is better than feared could be a positive development for the stock, but he also points out that concerns related to DOGE are likely to persist into the third quarter. Despite these challenges, TD Cowen’s stance on ServiceNow remains positive, as reflected in the maintained Buy rating.
In other recent news, ServiceNow has been the focus of several analyst evaluations and adjustments to price targets. Cantor Fitzgerald reaffirmed its Overweight rating for ServiceNow, setting a price target of $1,048, while expressing optimism about the company’s acquisition of Moveworks and the potential of agentic AI. However, the firm noted uncertainties in the U.S. Federal revenue segment and broader macroeconomic factors. Oppenheimer, on the other hand, lowered its price target to $970 but maintained an Outperform rating, citing strong first-quarter results and robust cost discipline as positives. Goldman Sachs also adjusted its price target for ServiceNow to $1,050, maintaining a Buy rating and highlighting potential growth in subscription revenue. Raymond (NSE:RYMD) James reduced the price target to $1,000, keeping an Outperform rating, and noted the upcoming Knowledge user conference’s focus on AI. Lastly, BMO Capital Markets cut the price target to $990, retaining an Outperform rating, while expressing concerns over the impact of new tariffs and a weaker U.S. Federal Reserve on global GDP growth. These recent developments reflect a mix of optimism and caution among analysts regarding ServiceNow’s future performance.
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