Buy Rating Affirmed: ServiceNow’s Strong Performance and Promising GenAI Prospects

Analyst Robert Oliver from Robert W. Baird reiterated a Buy rating on ServiceNow (NOW – Research Report) and keeping the price target at $870.00.

Robert Oliver has given his Buy rating due to a combination of factors related to ServiceNow’s recent performance and future prospects. His optimism is particularly influenced by the company’s strong quarterly results, which exceeded consensus estimates for both revenue and earnings per share. The company’s subscription revenue showed robust year-over-year growth and margins were higher than expected. Furthermore, ServiceNow’s guidance for subscription revenue growth was modestly raised, despite facing foreign exchange headwinds, which indicates a positive outlook. Oliver also notes the company’s consistent high renewal rates and an increase in average contract value, underscoring its solid customer base and pricing power.

Additionally, Oliver is bullish on ServiceNow’s GenAI technology, which is seen as a key driver for enterprise-level productivity improvements. The Pro+ SKU, linked to GenAI, is described as the fastest selling offering in the company’s history. The public sector business, especially the U.S. Federal segment, continues to be a strong performer, with healthy growth and international expansion. Oliver’s anticipation of the upcoming analyst day and user conference is expected to provide further insights into financial targets and the contribution of GenAI to the product roadmap, reinforcing his positive stance on ServiceNow’s stock.

In another report released yesterday, Morgan Stanley also assigned a Buy rating to the stock with a $830.00 price target.

NOW’s price has also changed moderately for the past six months – from $530.170 to $716.250, which is a 35.10% increase.

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ServiceNow (NOW) Company Description:

Founded in 2004 and based in California, ServiceNow, Inc. is a software company which provides enterprise cloud computing solutions to help companies manage digital workflows for enterprise operations. The company offers its solutions to various sectors including healthcare, education, oil and gas, telecommunications, government, consumer products, technology, IT and financial services.