On Thursday, Barclays maintained its Overweight rating on ServiceNow (NYSE:NOW) stock and increased its price target from $980.00 to $1,000.00. The adjustment follows ServiceNow's recent performance, where its shares have seen a significant rise, outpacing the broader market index.
ServiceNow's stock has experienced a notable uptick, with a 24.2% increase compared to the 9.5% gain of the iShares Expanded Tech-Software Sector ETF (IGV) since the company's second-quarter earnings report. Despite this surge, the Barclays analyst noted that immediate reactions to the third-quarter results might not be as impactful.
The analyst highlighted the company's consistent ability to surpass expectations and the promising early results from its new genAI offerings. These factors contribute to ServiceNow's reputation as a premium asset in its sector, boasting better growth and strong margin levels relative to its peers.
While short-term share price movement may remain subdued, the long-term outlook for ServiceNow is positive, with expectations for the stock to continue its upward trajectory over time. The revised price target of $1,000 reflects confidence in the company's ongoing performance and market position.
Barclays' stance on ServiceNow is based on the company's solid financial results and innovative product offerings, which are expected to drive growth and investor interest in the future.
In other recent news, ServiceNow has seen a flurry of activity in the financial sector. Analysts from TD Cowen have raised the stock's price target to $1,000, citing a robust quarter for federal sales and a strong sales hiring trend. Morgan Stanley, while downgrading the rating to Equalweight, has also elevated the price target to $960, indicating stable demand for ServiceNow's services.
Further, Oppenheimer maintained an Outperform rating and raised the stock's price target to $1,020, acknowledging strong performance in the third quarter. Citi also kept a Buy rating and increased the price target to $1,068, reflecting confidence in ServiceNow's core business. Jefferies did the same, setting the price target at $1,100 in anticipation of a solid earnings report.
ServiceNow has reported over $1 billion in customer service management revenues, underscoring a strong position in the financial services sector. The company also announced a significant $1.5 billion investment in its UK operations over the next five years, aimed at upgrading its London and Newport data centers and reaching 240,000 UK learners by 2027 through ServiceNow University.
Despite potential disruptions due to a Department of Justice investigation into Carahsoft Technology Corp., a key partner for ServiceNow, the company continues to aim high, aspiring to become the most valuable enterprise software company by 2030. These are the latest developments in the company's trajectory.
InvestingPro Insights
ServiceNow's strong market position, as highlighted by Barclays, is further supported by real-time data 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 and aligns with the analyst's observation of strong margin levels relative to peers.
InvestingPro data reveals that ServiceNow's revenue growth remains robust at 24.17% over the same period, reflecting the company's ability to consistently expand its business. This growth trajectory supports Barclays' optimistic long-term outlook for the stock.
Two key InvestingPro Tips reinforce the analyst's perspective: ServiceNow is noted as a "Prominent player in the Software industry" and has shown a "High return over the last year" with a 63.73% price total return. These insights align with the company's outperformance of the iShares Expanded Tech-Software Sector ETF mentioned in the article.
For investors seeking a deeper understanding of ServiceNow's potential, InvestingPro offers 15 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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