Wells Fargo raises ServiceNow stock price target to $1,275 on higher estimates

Investing.com - Wells Fargo raised its price target on ServiceNow (NYSE:NOW) to $1,275.00 from $1,225.00 on Thursday, while maintaining an Overweight rating on the stock. According to InvestingPro data, analysts have set targets ranging from $734 to $1,300, with ServiceNow’s current market capitalization standing at $189.2 billion.

The investment firm revised its estimates higher to account for ServiceNow’s raised 2025 guidance and its flow-through impact to 2026 and beyond. ServiceNow has demonstrated strong revenue growth of 21.12% over the last twelve months, supporting the optimistic outlook.

Wells Fargo updated its fiscal year 2025 revenue estimate to $13.2 billion, with free cash flow projections increasing to $4.5 billion from $4.2 billion, and earnings per share forecast rising to $17.43 from $17.09.

For fiscal year 2026, the firm now expects ServiceNow to generate revenues of $15.6 billion, up from its previous estimate of $15.5 billion, with free cash flow of $5.4 billion compared to $5.1 billion previously, and EPS of $20.64 versus $20.19.

ServiceNow shares currently trade at 12.5x next twelve months enterprise value to sales and 35x enterprise value to free cash flow, with Wells Fargo noting that its premium valuation is warranted given ServiceNow’s profile as "one of the best growth assets in large-cap software." InvestingPro data shows ServiceNow trading at a P/E ratio of 115.09 with impressive gross profit margins of 78.52%. The company’s current price aligns closely with InvestingPro’s calculated Fair Value, suggesting the stock is fairly valued despite its premium multiples. For deeper insights and 14 additional ProTips on ServiceNow, check out its comprehensive Pro Research Report available on InvestingPro.

In other recent news, ServiceNow reported its third-quarter earnings for 2025, surpassing market expectations with an earnings per share of $4.82, compared to the projected $4.26. The company’s revenue also exceeded forecasts, reaching $3.41 billion against an anticipated $3.35 billion. Wolfe Research reiterated an Outperform rating for ServiceNow, maintaining a price target of $1,210, following the company’s strong performance despite concerns about a government shutdown. Subscription revenue grew by 20.5% year-over-year, exceeding expectations by 1 percentage point. Additionally, ServiceNow’s current remaining performance obligations increased by 20.5% year-over-year, beating forecasts by 2.5 percentage points. Goldman Sachs also raised its price target for ServiceNow to $1,250, maintaining a Buy rating due to the company’s strong quarterly results. ServiceNow outperformed its own guidance with subscription revenue growth of 21.5%, compared to the expected 19.5%. These developments reflect the company’s robust financial health and operational performance in recent months.

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