Investing.com -- ServiceNow (NYSE: NOW) shares rose 5% following BofA Securities analyst Tal Liani initiating coverage with a Buy rating and a $130 price target, implying 37% upside from Friday’s close of $95.07.

The upgrade comes after the stock declined approximately 38% year-to-date. BofA cited ServiceNow’s deeply embedded position within enterprise workflows as a key strength, noting the company serves as the system that governs, routes, approves, and audits activity across organizations.

"While AI is disrupting the software landscape, we think NOW stands to benefit from, rather than be replaced by, new AI solutions," the analyst commented.

BofA believes ServiceNow’s workflow entrenchment positions it to benefit from autonomous agent deployments across IT, employee, and customer workflows. The firm expects such deployments would increase demand for orchestration, permissions, approvals, policy enforcement and auditability, aligning with ServiceNow’s core capabilities.

The analyst highlighted several factors supporting the company’s AI strategy, including AI Control Tower, Action Fabric, hybrid pricing models, and recent Armis and Veza acquisitions that strengthen security and identity context.

BofA forecasts 18-22% revenue growth from 2026-2028 alongside free cash flow margins of 35-37%. The firm noted that contracted remaining performance obligations growth has exceeded 20% for five consecutive quarters. Management expects approximately 100 basis points of operating margin and free cash flow margin expansion in 2027.

The stock currently trades at 14x CY27E EV/FCF, which BofA views as attractive given the company’s growth profile and profitability relative to peers.