ServiceNow (NOW) PT Raised to $1,100 at Evercore ISI

Evercore ISI analyst Kirk Materne raised the price target on ServiceNow (NYSE: NOW) to $1,100.00 (from $1,000.00) while maintaining a Outperform rating.

The analyst comments "Expecting solid results on a c/c basis but F/X headwinds could create more of ‘beat/bracket’ scenario for FY25 guide. While there will be a lot of F/X noise on the F4Q print, we expect that NOW will report a nice F4Q beat and upbeat outlook for CY25 on a c/c basis. Partners continue to point to a constructive demand environment for NOW with AI momentum continuing to strengthen. Some of the highlights from our recent survey of 15 large NOW partners (representing ~$500-$750mn of total NOW software spend) include: 1) The overall tone remains strong with 80% of respondents seeing a stronger pipeline for their ServiceNow practices today than 3-6 months ago, down slightly from ~93% last quarter but given the nature of the question asking about 3-6 month q/q change, we would interpret this as ‘strength on top of strength’; 2) 80% of respondents are expecting y/y revenue growth from their NOW practices to accelerate over the next 12 months, including 20% expecting a +5% acceleration – up from 60% expecting acceleration last quarter, with the majority of the shift being from ‘stable’ to ‘up slightly’; 3) Pro+ adoption expectations are improving, with 93% of respondents expecting +5% adoption over the next 12 months (vs. 87% last quarter), and the distribution between expected adoption bands moving ‘up the adoption curve’; 4) 80% of respondents expect a +10% pricing uplift for Pro+ vs. management’s expectation of ~30% (up slightly vs 73% last Q); 5) In terms of workflows, partners point to creator and technology workflows as showing particularly strong momentum, with tech leading among verticals and public sector, financial services, and manufacturing all ticking up q/q. Bottom line: While NOW remains a best in class compounder and we expect a solid beat/raise (on a c/c basis), we believe the C4Q run up in shares and potential for some F/X ‘noise’ creates a more balanced risk/reward into the quarter. In this note, we are adjusting our estimates to account for a tougher macro backdrop; however given the positive tone of our partner checks, we are upping our PT to $1,100 based on ~44x EV/CY26 FCF as we expect investors to look ultimately through the F/X headwinds when taking a 3-6 month view."

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