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Reacting to the report, Mizuho analysts, who have a Buy rating and $510 price target on the stock, told investors that NOW management noted that demand for its platform remains durable, and stated that it fully expects to monetize GenAI going forward.
“We reiterate our expectation of continued high growth over the course of the next few years, which should be aided by robust demand for workflow automation, strong cross-sell opportunities and greater penetration of newer markets,” wrote the analysts.
Guggenheim analysts raised the firm’s price target on Buy-rated NOW to $518 from $511. They stated that NOW’s lowered long-term targets were better than feared, although there is still some risk.
“We believe the revised 2024 subscription revenue of $10.4B+ (from $11B+ previously) still presents risk, as we estimate that it would require a significant step-up in New ACV growth next year. An improving macro backdrop and early monetization of Generative AI would mitigate this risk,” they said.
Stifel analysts maintained a Buy rating and $525 target price on NOW, telling investors that with the reset now in the rearview mirror, it is “time to focus on the sizeable opportunity.”
“We expect that ServiceNow’s rapidly expanding platform, growing pipeline, and large deal momentum should enable the company to maintain 20%+ revenue growth and margin expansion in coming years,” they wrote.
BofA analysts believe NOW’s observability opportunity is underappreciated.
“We believe that observability is an underappreciated opportunity which could begin to drive incremental bookings growth as early as H2FY23. Integration of logging to metrics and traces is scheduled for the Summer. With growing GTM focus following the release, we expect traction near term in a naturally adjacent category,” explained the analysts, who reiterated a Buy rating and $600 price target on the stock.
