On Friday, Bernstein, a financial firm, maintained its Outperform rating on ServiceNow (NYSE:NOW) shares, with a price target set at $906.00. The firm acknowledged concerns over potential short-term risks to the stock's price but remained positive on the company's prospects for long-term growth.
"We observe investors have crowded the name looking for safety, and wonder if this investigation remains ongoing that it could pressure the stock in the near term," said the analysts.
Despite these concerns, Bernstein expressed confidence in ServiceNow's potential as a "quality compounder," especially for investors willing to hold onto their shares for a longer period. The firm indicated that any significant price correction could present an opportunity for investors to increase their positions in ServiceNow, as has been suggested during previous market dips that offered attractive buying opportunities.
In other recent news, ServiceNow and SAP face potential disruptions due to a Department of Justice investigation into Carahsoft Technology Corp., a key partner for both firms. The probe, focusing on allegations of price-fixing on SAP products sold to the U.S. government, could affect their sales pipelines and future growth. Analysts from Keybanc and Piper have raised concerns about this situation, as both ServiceNow and SAP have substantial business engagements with Carahsoft.
ServiceNow, despite these challenges, remains ambitious. The company has declared its goal to become the most valuable enterprise software company by 2030, as announced during their recent earnings call. The firm's CEO, William McDermott, attributes this vision to their innovative spirit and strong corporate culture.
ServiceNow has reported a strong performance in customer service management, with revenues exceeding $1 billion, and a dominant position in the financial services sector, serving all top 24 global banks. Future growth is projected to be driven by increasing enterprise investment in AI, a market expected to reach $3 trillion by 2027. The company is also collaborating with NVIDIA (NASDAQ:NVDA) and Hugging Face to develop domain-specific large language models.
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