U.S. stocks edge higher; solid earnings season continues
On Tuesday, TD Cowen analysts maintained their Buy rating on ServiceNow (NYSE:NOW) stock, with a price target set at $1,300.00. According to InvestingPro data, ServiceNow currently trades at $803.75, with analysts’ targets ranging from $716 to $1,426. The company boasts impressive gross profit margins of 79.18% and has demonstrated strong revenue growth of 22.44% over the last twelve months. The firm’s analysts highlighted ServiceNow’s recent announcement to acquire artificial intelligence company Moveworks for approximately $2.85 billion, marking the largest acquisition in ServiceNow’s history, roughly ten times larger than any previous purchase. This strategic move comes as ServiceNow, with its substantial market capitalization of $166.48 billion, maintains a solid financial position with moderate debt levels and strong cash flows.
ServiceNow’s intention with this acquisition is to expedite the adoption of Agentic AI by integrating Movework’s advanced user interface, which is tailored for business users, and its unique enterprise search technology. Moveworks had reported over $100 million in annual recurring revenue (ARR) in September 2024 and is projected to reach approximately $150 million ARR by the end of calendar year 2025. This anticipated growth could signify a purchase multiple of around 20 times the ARR.
TD Cowen analysts believe that despite the substantial nature of this deal, Moveworks has the potential to accelerate ServiceNow’s Agentic AI roadmap significantly in a competitive landscape that is evolving rapidly among major Software (ETR:SOWGn) as a Service (SaaS) vendors. Moveworks’ technology appears to be a valuable addition to ServiceNow’s developing AI stack and could enhance ServiceNow’s capabilities in the AI space.
Furthermore, the acquisition is seen as a strategic fit for ServiceNow, as Moveworks possesses complementary technologies that could bolster ServiceNow’s AI offerings. Additionally, Moveworks’ direct sales approach and focus on large enterprise go-to-market strategies align well with ServiceNow’s sales motion, which could facilitate a smoother integration and synergy between the two companies.
ServiceNow’s pursuit of Moveworks reflects the company’s commitment to advancing its position in the AI sector and its readiness to make significant investments to stay ahead in the competitive SaaS market. The deal is poised to provide ServiceNow with cutting-edge AI capabilities and support its growth trajectory in the years to come. For deeper insights into ServiceNow’s valuation and growth prospects, including 18 additional ProTips and comprehensive financial analysis, visit InvestingPro, where you’ll find detailed research reports and expert analysis.
In other recent news, ServiceNow has announced its largest acquisition to date, agreeing to purchase Moveworks, an AI assistant and enterprise search platform, for $2.85 billion in cash and stock. This acquisition is expected to enhance ServiceNow’s AI and automation capabilities by integrating Moveworks’ advanced AI assistant technology. Analysts from Cantor Fitzgerald, Stifel, UBS, RBC Capital, and JMP have weighed in on the acquisition, with most maintaining positive ratings for ServiceNow. Cantor Fitzgerald has kept an Overweight rating with a $1,048 price target, while Stifel reiterated a Buy rating with a $1,175 target. UBS adjusted its price target to $1,000, maintaining a Buy rating, and RBC Capital reduced its target to $986 but continued to endorse the stock with an Outperform rating. JMP analysts reaffirmed their Market Outperform rating with a $1,300 price target.
The acquisition is seen as a strategic move to expand ServiceNow’s agentic AI capabilities and enter the enterprise search market. ServiceNow’s Pro Plus SKU has surpassed $200 million in Annual Contract Value, highlighting the company’s growth in AI offerings. Analysts have noted that while the fiscal contribution to FY26 subscription revenue remains uncertain, ServiceNow management is targeting over $15 billion in subscription revenue by FY26 through organic growth. The integration of Moveworks’ technology is anticipated to enhance ServiceNow’s existing offerings and drive growth towards this ambitious revenue target.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.