After attending its investor day meet, analysts offered their views on ServiceNow, Inc.. Mizuho analyst Gregg Moskowitz said management expressed bullishness on its growth prospects and targeted $11 billion+ of subscription revenue by 2024, and $16 billion+ by 2026, above its initial targets of $10 billion+ and $15 billion+, respectively.
NOW also raised 2024E OMs by 50bps, to 27 percent. Moskowitz reiterated his expectation of continued high growth over the next few years triggered by robust demand for workflow automation, strong cross-sell opportunities, and greater penetration of newer markets.
Moskowitz reiterated his Buy rating but lowered the price target to $550 (24.2 percent upside) given the material recent contraction in comp multiples.
Credit Suisse analyst Phil Winslow believes that 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 price target of $700 (58 percent upside).
Winslow, therefore, expects ServiceNow to (1) deliver above-consensus revenue growth as the company continues to gain a share of the ITSM market and enters adjacent markets and (2) sustain best-in-class profitability.
RBC Capital analyst Matthew Hedberg walked away incrementally more optimistic about the large and growing opportunity and the power of ServiceNow’s platform.
Specifically, Hedberg liked to see 2024 and 2026 revenue guidance and 2024 profitability guidance move higher than management’s prior estimates. Hedberg felt the LT organic growth and profitability strategy continues to play out.
ServiceNow remained a top idea as he maintained Overperform rating and $670 PT (51.3 percent upside).
BMO analyst Keith Bachman noted that despite a weakening macro environment, NOW raised medium-term (FY24) and longer-term (FY26) targets, demonstrating confidence in growth potential by remaining a top IT and business process priority.
While Bachman remained defensive, given that NOW currently trades at a reasonable FCF valuation think NOW stock is intriguing even in a weak tech tape.
Bachman reiterated its Outperform rating and maintained its estimates and price target of $595 (34.3 percent upside).
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