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Tuesday, TD Cowen reaffirmed its positive stance on ServiceNow shares (NYSE: NYSE:NOW), maintaining both a Buy rating and a $1,100.00 price target. With a current market capitalization of $201 billion and trading at a P/E ratio of 130, InvestingPro analysis suggests the stock is slightly overvalued relative to its Fair Value. During ServiceNow’s Analyst Day and Knowledge Conference held in Las Vegas this week, management reiterated its financial targets for FY26, which include a subscription revenue goal of over $15 billion and sustained EBIT/FCF margin targets. A new target was introduced for approximately a 100 basis point EBIT/FCF margin expansion in FY27. The company’s impressive gross profit margin of 79% and strong revenue growth of 21% year-over-year demonstrate its operational efficiency.
ServiceNow’s product, Now Assist, is reportedly the company’s fastest-growing offering to date, with expectations to surpass $1 billion in Annual Contract Value (ACV) by FY26. TD Cowen analysts highlighted ServiceNow’s significant role in the monetization of General AI within the Software (ETR:SOWGn) as a Service (SaaS) sector, citing the company’s current lead among peers in this area.
The firm’s analysts are enthusiastic about ServiceNow’s strategic focus on the nascent Agentic AI opportunity, noting its efforts to enhance its Data + Analytics and Orchestration + Governance capabilities. ServiceNow is also making inroads into the Customer Relationship Management (CRM) market, aiming to streamline front, middle, and back-office workflows through an integrated system-of-action platform.
The continuation of the Pro+ product cycle is expected to further propel the monetization of General AI for ServiceNow, with an additional layer of consumption revenue anticipated to contribute over time. TD Cowen reiterated its Buy rating on ServiceNow shares and continues to list the company as a Best Idea in its coverage. According to InvestingPro, the company maintains a "GREAT" financial health score of 3.04, with 13 additional ProTips available to subscribers, including detailed insights into its AI strategy and market position.
In other recent news, ServiceNow has seen a range of analyst updates following its Financial Analyst Day and other investor meetings. RBC Capital Markets raised its price target for ServiceNow to $1,100, maintaining an Outperform rating. The firm cited ServiceNow’s successful monetization of Generation AI technologies as a key factor. Oppenheimer also increased its price target to $1,100, highlighting ServiceNow’s goal of achieving $1 billion in Annual Contract Value for its AI segment by 2026 and its projected faster Free Cash Flow margin growth for 2027.
Meanwhile, JMP Securities maintained a Market Outperform rating with a $1,300 price target, emphasizing ServiceNow’s strong market presence and strategic initiatives. BMO Capital Markets kept its price target at $1,025, reaffirming an Outperform rating and noting the company’s focus on expanding its AI capabilities. Needham analysts held steady with a Buy rating and a $1,050 target, expressing confidence in ServiceNow’s ability to expand margins through AI integration. These updates reflect a generally positive outlook from analysts regarding ServiceNow’s growth strategies and financial targets.
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