ServiceNow (NOW) PT Raised to $740 at Stifel Following Checks

Stifel analyst Brad Reback raised the price target on ServiceNow (NYSE: NOW) to $740.00 (from $650.00) while maintaining a Buy rating following checks.

The analyst commented, "We recently completed our quarter-end SI checks that pointed to a healthy finish to the year, driven by stabilizing macro conditions and healthy large order bookings. Further, our checks highlighted some early purchasing activity for ServiceNow's new gen-AI infused Pro Plus SKUs, although we don't expect this to materially contribute to revenue growth until 2H24.

Looking forward, our checks also highlighted momentum that is driving solid 1H24 deal pipelines, as enterprises are increasingly consolidating on the ServiceNow platform.

Given our solid checks, we expect ServiceNow to exceed Management's 4Q cRPO growth guidance (20.5%/21% Y/Y-CC), which appears conservative, as the guide implies a 200bps sequential deceleration (after excluding 100bps Fed cRPO headwind), despite only a 50bp harder comp.

Net/net, we expect that ServiceNow's expanding platform, growing pipeline, large deal momentum, and emerging generative AI opportunity, should enable the company to maintain 20%+ revenue growth and margin expansion in coming years."

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