By Senad Karaahmetovic
ServiceNow (NYSE 🙂 held its Analyst Day yesterday where it raised its FY24 and FY26 targets from the previous mid-term guide released last year.
The company is now looking for more than $ 11 billion in subscription revenues, up from earlier forecasts of $ 10 billion and more. Similarly, the subscription revenue target in FY26 was raised to $ 16 billion from $ 15 billion.
For Tyler Radke of Citi, ServiceNow analyst’s day had a confident tone in a choppier market.
“We reiterate our Buy rating because we see NOW poised to continue to deliver hi-20s up to 30%+ organic growth in size with continued margin expansion as it utilizes a large enterprise install base that there is an expanding portfolio of new products that will help modernize key organizational workflows, ”the analyst said in a client note.
Evercore ISI analyst Kirk Materne believes that NOW is “in a unique position to be a ‘digital business platform’ and why its growth is resilient even on a more uneven macro backdrop.”
“While we expect the software to remain at the mercy of the broader market in the near future (including NOW), we believe the six -month outlook for some of the diminished, cash generative names SaaS looks very attractive at current levels and includes it NOW, ”added Materne.
BMO analyst Keith Bachman also reiterated an Outperform rating on NOW shares.
“While we remain defensive, since NOW is currently trading at a reasonable FCF value of approximately 28x EV/FY23 FCF, we think NOW stock is intriguing even on weak tech tape,” the analyst told clients at a note.