On Thursday, Baird maintained an Outperform rating on ServiceNow (NYSE: NYSE:NOW) shares and increased the stock's price target to $975 from $900. The firm's analyst cited ServiceNow's robust third-quarter performance, which surpassed key financial targets, and improved its full-year guidance.
ServiceNow's GenAI technology is gaining traction, influencing customer purchases, particularly with the Now Assist product. The company has reported 44 customers with an Annual Contract Value (ACV) over $1 million.
ServiceNow is expanding its workforce, indicating a strong belief in the additional opportunities presented by GenAI and Data Fabric technologies. The company also announced extended collaborations with industry leaders NVDA and SNOW and the appointment of a new President, COO, and CPO from Alphabet (NASDAQ:GOOGL). The analyst noted that ServiceNow's U.S. Federal business remains unaffected by the recent developments with Carahsoft.
The third quarter's success was highlighted by ServiceNow's ability to exceed expectations and raise its outlook for the year. The company's strategic moves, including partnerships and executive hiring, demonstrate its commitment to growth and innovation in the AI space.
ServiceNow's GenAI initiative continues to be a key driver for the company's performance, as seen in the increased use of their Now Assist platform. The AI-driven tool has been instrumental in securing high-value contracts, reflecting the company's strong position in the market.
The analyst also reassured investors regarding ServiceNow's government-related business. Despite potential concerns arising from Carahsoft's recent news, ServiceNow's federal sector operations have not experienced any negative impact, supporting the analyst's positive outlook on the stock.
In other recent news, ServiceNow has been in the spotlight following its strong Q3 performance. The company reported a 22.5% year-over-year increase in subscription revenue, reaching $2.715 billion. ServiceNow also raised its full-year 2024 subscription revenue forecast to between $10.655 billion and $10.66 billion, indicating a robust business trajectory.
Several analyst firms have responded positively to these developments. RBC Capital Markets raised its price target for ServiceNow to $1,045, while Canaccord Genuity and Goldman Sachs increased their price targets to $1,000 and $1,050, respectively. These adjustments reflect confidence in ServiceNow's execution capabilities and growth opportunities.
In addition to financial growth, ServiceNow announced the appointment of Amit Zavery as President, Chief Product Officer, and COO, a move that has garnered interest from analysts at Jefferies. These recent developments are part of ServiceNow's ongoing strategy targeting a trajectory towards $30 billion in revenue.
InvestingPro Insights
ServiceNow's strong performance, as highlighted in the article, is further supported by key financial metrics and insights from InvestingPro. The company's impressive gross profit margin of 79.07% for the last twelve months as of Q2 2024 underscores its operational efficiency, aligning with the analyst's positive outlook. This is complemented by a robust revenue growth of 24.17% over the same period, reflecting the company's expanding market presence and the success of its GenAI initiatives.
InvestingPro Tips indicate that ServiceNow is trading near its 52-week high, with a strong return of 63.73% over the last year. This performance is consistent with the company's recent successes and improved guidance mentioned in the article. Additionally, ServiceNow's status as a prominent player in the Software industry reinforces its position as a leader in AI-driven enterprise solutions.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips, providing deeper insights into ServiceNow's financial health and market position.
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