Barclays has increased its price target for ServiceNow (NOW, Financial) from $967 to $969, maintaining an Overweight rating on the stock. This decision comes after ServiceNow reported a robust first-quarter performance, surpassing expectations across all key metrics.
Despite initial concerns leading into the quarter, the company's results were deemed "normal" by analysts, reflecting underlying strength in its operations. However, ServiceNow's management has taken a cautious approach by making slight adjustments to their future guidance, aiming to provide a buffer against potential challenges ahead.
The adjustments highlight the company's proactive stance in navigating future uncertainties, ensuring stability and continued growth in a volatile economic environment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 40 analysts, the average target price for ServiceNow Inc (NOW, Financial) is $1,042.64 with a high estimate of $1,300.00 and a low estimate of $716.00. The average target implies an upside of 28.29% from the current price of $812.70. More detailed estimate data can be found on the ServiceNow Inc (NOW) Forecast page.
Based on the consensus recommendation from 47 brokerage firms, ServiceNow Inc's (NOW, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for ServiceNow Inc (NOW, Financial) in one year is $1056.38, suggesting a upside of 29.98% from the current price of $812.7. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the ServiceNow Inc (NOW) Summary page.
NOW Key Business Developments
Release Date: April 23, 2025
- Subscription Revenue: $3.005 billion, growing 20% year over year in constant currency.
- CRPO (Current Remaining Performance Obligations): $10.31 billion, representing 22% year-over-year constant currency growth.
- Operating Margin: 31%, approximately 100 basis points above guidance.
- Free Cash Flow Margin: 48%.
- Remaining Performance Obligation (RPO): $22.1 billion, growing 25.5% year over year.
- Deals Greater Than $1 Million: 72 deals, with 9 deals over $5 million in net new ACV.
- Customers Generating Over $5 Million in ACV: 508 customers.
- Cash and Investments: $10.9 billion.
- Share Repurchase: Approximately 316,000 shares bought back.
- Subscription Revenue Guidance for 2025: Raised to $12.64 billion to $12.68 billion, representing 18.5% to 19% year-over-year growth.
- Q2 Subscription Revenue Guidance: Between $3.030 billion and $3.035 billion, representing 19% to 19.5% year-over-year growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ServiceNow Inc (NOW, Financial) reported its biggest Q1 ever for net new ACV, with subscription revenue growing 20% year over year in constant currency.
- The company achieved an operating margin of 31%, which was approximately 100 basis points above their guidance.
- ServiceNow Inc (NOW) saw a significant increase in large deals, with 72 deals greater than a million in net new ACV, up from 63 a year ago.
- The company reported strong growth in its AI initiatives, with the number of Pro Plus deals more than quadrupling year over year.
- ServiceNow Inc (NOW) raised its guidance for the full year 2025, reflecting strong demand and a healthy pipeline.
Negative Points
- There is uncertainty in the global economy, which could impact future performance and decision-making among enterprise customers.
- The company is facing potential risks from geopolitical factors, including tariffs and trade negotiations.
- ServiceNow Inc (NOW) acknowledged the challenges in the public sector, with federal agencies navigating changes from tightening budgets.
- Despite strong performance, the company is taking a conservative approach to its full-year outlook due to potential macroeconomic headwinds.
- There is a risk of deal elongations or delays in decision-making among enterprise customers due to the uncertain environment.
