Bernstein: 'ServiceNow (NOW) Guide Seems Set Up For A Strong Beat/Raise Potential'; PT Lowered

Bernstein SocGen Group analyst Peter Weed lowered the price target on ServiceNow (NYSE: NOW) to $1,003.00 (from $1,021.00) while maintaining an Outperform rating.

The analyst commented: "ServiceNow’s Q1’25 earnings demonstrated its advantaged positioning in both strong and weak markets. While facing down recessionary worries and US Federal revenue risks from DOGE, the company still delivered a ~40 bps CC revenue beat vs. midpoint (and 13 bps vs. top end of range). The big question we heard into earnings was “what will guidance be?” — management seemed to put the market at ease by only slightly adjusting down their full year CC guide by >$35MM (including the in-quarter beat). This adjustment was intended to further cover a downside case of US Federal growth coming in at ~0 net new ACV, and a few other industries (like manufacturing) potentially doing worse than pipeline suggests.

The guide seems set up for a strong beat/raise potential, and management reiterated confidence in 2026 at $15B+ revenue. Most demand signals showed strongly, including US Public Sector Q1 net new ACV being up 30% YoY, manufacturing industry customers up 100%, and a sales pipeline fuller than normal. In addition, their GenAI offerings (“Pro Plus SKU”) are directly showing strong momentum as they drove ACV per deal up +1/3 QoQ, and are seeing adoption faster than prior products. On top of that, these AI tools are driving an acceleration in Pro SKU adoption (which had stagnated) — management commented their old goal of 75% customers on Pro is too conservative, and nearly all may adopt in time."

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