ServiceNow (NOW) Stock Forecast & Price Target

ServiceNow Inc. has demonstrated robust performance through a growing cohort of large customers, leading to an estimated full-year subscription revenue growth of approximately 20%, which marks an increase from prior projections. The company has solidified its leadership in the IT service management market, capturing a 40% share by 2024, and has significantly increased its market presence in model-driven application platforms and human capital management sectors. Furthermore, ServiceNow's strategic initiatives, including a successful partnership with the Federal Government and investments in AI capabilities, have resulted in strong revenue growth, particularly in the federal segment, bolstering a positive overall outlook.

ServiceNow Inc has experienced a decline in its Rule of 40 score to 54 in FY24, reflecting a deceleration in revenue growth despite gains in profitability, which is concerning in comparison to the 60+ levels seen during the COVID years. The company's stock has also underperformed in the market, losing 23% year-to-date, alongside increased competition and potential deceleration of subscription revenues. Additional downside risks include existential concerns regarding the future of SaaS in the context of AI growth, decreased job postings that may indicate limited hiring opportunities, and disappointing traction in work management solutions, all contributing to a challenging financial outlook.