Key Takeaways
- ServiceNow stock rose 10% in the past month (through Tuesday’s close) while the Nasdaq 100 slipped, and most of the gain came in the last week.
- Ten firms raised their price targets on ServiceNow from Oct. 13 to 20, ahead of third-quarter results after the close on Oct. 28.
- The forward P/E has climbed from about 23x at the end of June to the low 30s, and the consensus target sits barely above the share price.
- The stock looks like a hold until cRPO growth meets or beats the company’s 19.5% guide.
ServiceNow (NOW) stock is up 10% in the past month (through Tuesday’s close). Over the same stretch the Nasdaq 100 slipped 0.5%.
Most of that gain came in the last week, as Wall Street lined up behind the stock ahead of its third-quarter report.
TIKR tracks 49 analysts on ServiceNow. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on ServiceNow, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See ServiceNow’s Analyst Ratings
Ten raises in eight days
From Oct. 13 to 20, ten firms raised their price targets: Barclays, Oppenheimer, Evercore ISI, Citi, Mizuho, TD Cowen, Piper Sandler, StoneX, BMO and Bernstein. Bernstein’s $266 is now the Street’s high.
The biggest day was Oct. 15, when shares jumped 6.1% on a down day for tech. Mizuho and TD Cowen raised their targets before the open, and ServiceNow launched AI Passport and a new version of EmployeeWorks. The company had also just shot down a Business Insider report that AI startup Decagon had held early acquisition talks with it. “ServiceNow has no interest or intention of purchasing Decagon,” said Amit Zavery, ServiceNow’s president, chief product officer and COO.
The stock gave back 4.4% the next day as enterprise software sold off on worries about AI financing.
All those raises lifted the consensus target to $154, barely above where the stock closed Tuesday.
cRPO is the number to watch
ServiceNow reports after the close on Oct. 28. Management expects third-quarter subscription revenue between $3.975 billion and $3.980 billion, 20.5% growth, with cRPO up 19.5%. That’s slower than the second quarter’s 24.5% subscription growth. Part of the reason is that federal demand pulled some on-premise revenue from the third quarter into the second.
Analysts expect revenue to keep growing about 20% a year, to $19.3 billion in 2027.
Priced for a good quarter
Most of the rally since June has come from a higher multiple. Forward earnings rose only about 4% from June 30 to Oct. 9, while the forward P/E went from about 23x to about 31x. As of Monday, it was 32x.
(That’s still far below its five-year average of 53x, so the stock isn’t expensive by its own history.)
My take: hold. A good quarter looks priced in, so I wouldn’t buy more before Oct. 28. I wouldn’t take profits either. Revenue is still growing about 20% a year, and the stock is still 22.5% below its 52-week high. If cRPO growth beats 19.5% despite the federal pull-forward, I’d add.
Of course, Oct. 16 showed how fast sentiment on software can turn, so a miss would sting.
So what is ServiceNow stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
