Where Does ServiceNow Stand With Analysts After Investor Day?

After attending its investor day meeting, analysts offered their insights on ServiceNow, Inc. NOW. Mizuho Analyst Gregg Moskowitz said management has expressed bullishness on its growth prospects and has targeted $ 11 billion+ in subscription revenue in 2024, and $ 16 billion+ in 2026, more than its initial targets of $ 10 billion+ and $ 15 billion+, respectively.

NOW also raised 2024E OMs by 50bps, to 27%. Moskowitz reiterated his expectation of continued high growth over the next few years triggered by robust need for workflow automation, strong cross-sell opportunities, and greater access to businesses. newer markets.

Moskowitz reiterated its Buy rating but lowered the target price to $ 550 (24.2% upside) due to the recent material shrinkage in the comp multiple.

Credit Suisse Analyst Phil Winslow believes ServiceNow’s broad applicability and deep understanding of enterprise workflows offer a long runway for organic growth as a “platform of platforms.” Winslow had an Outperform rating with a target price of $ 700 (58% upside).

Winslow, therefore, relies on ServiceNow to (1) deliver more than agreed -upon revenue growth as the company continues to gain share of the ITSM market and enter adjacent markets and (2) maintain the best profitability .

RBC Capital Analyst Matthew Hedberg has moved away gradually more optimistic about the large and growing opportunity and the power of the ServiceNow platform.

In particular, Hedberg wants to see revenue guidance in 2024 and 2026 and 2024 profitability guidance higher than previous management estimates. Hedberg feels that LT’s organic growth and profitability strategy continues to play a role.

ServiceNow remained the top idea as it maintained the Overperform rating and $ 670 PT (51.3% upside).

BMO Analyst Keith Bachman noted that despite the deteriorating macro environment, NOW has raised its medium-term (FY24) and long-term (FY26) targets, showing confidence in the growth potential by remaining a leading IT and business process priorities.

While Bachman remained defensive, since NOW is currently trading on a reasonable FCF analysis I think NOW stock is intriguing even on a weak tech tape.

Bachman reiterated its Outperform rating and maintained its estimates and price target of $ 595 (34.3% upside).

Price Action: NOW shares traded 4.45% higher at $ 438.31 in the last check Wednesday.

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