Key Takeaways
- Guggenheim shifted its stance on ServiceNow from Neutral to Buy, establishing a $125 price objective that triggered a 4% Wednesday rally
- Shares had declined approximately 35% following Guggenheim’s last rating change from Sell to Neutral in December 2025
- Evercore ISI reaffirmed its Outperform designation with a $150 price objective before the company’s Q2 earnings release
- Management projects Q2 current remaining performance obligations (cRPO) expansion of roughly 19.5% on a constant currency basis
- At its Financial Analyst Day, the enterprise software provider mapped out a trajectory toward exceeding $30 billion in subscription revenues by fiscal 2030
ServiceNow (NOW) experienced a 4% boost on Wednesday following a rating upgrade from Guggenheim’s John DiFucci, who elevated the stock from Neutral to Buy while establishing a $125 price objective.
Trading at $99.28 before Wednesday’s market open — representing a roughly 51% decline over the trailing twelve months — the $125 target signals substantial potential upside.
DiFucci’s valuation methodology applies a 7.5x multiple to enterprise value versus next-twelve-months recurring revenue, placing it above most software-as-a-service comparables. However, Guggenheim argues this premium is warranted based on the firm’s profitability profile and anticipated double-digit revenue expansion.
“We believe current levels present an attractive opportunity for investors to purchase a comfortably profitable stock likely to continue to grow at double digits,” DiFucci stated in his research note.
The positive call arrives after a challenging period for shareholders. From Guggenheim’s December 2025 upgrade of NOW from Sell to Neutral through today, shares tumbled 35% — significantly underperforming the IGV software benchmark’s 16% decline and lagging the S&P 500’s 10% advance during the identical timeframe.
DiFucci acknowledged that artificial intelligence monetization remains unlikely to materialize in the near term, while highlighting genuine AI-related headwinds including potential talent migration to AI-focused startups. Nevertheless, the analyst refrained from characterizing AI as a fundamental threat to ServiceNow’s business model.
The research note also highlighted the company’s substantial dependence on merger and acquisition activity, particularly its Armis transaction, as a growth catalyst that warrants investor scrutiny.
Evercore Maintains $150 Objective Before Q2 Results
In a separate action, Evercore ISI confirmed its Outperform rating on NOW while maintaining its $150 price target as the quarterly earnings announcement approaches.
Evercore analysts observed that the investment narrative has pivoted from theoretical long-term AI strategy discussions toward tangible near-term operational performance following the company’s recent Financial Analyst Day presentation.
During that investor event, ServiceNow executives unveiled their AI Control Tower framework, AI-native product bundling approach, and ambitious subscription revenue goal surpassing $30 billion by fiscal year 2030 — representing a compound annual growth rate around 17.5%.
Management provided Q2 cRPO growth guidance of approximately 19.5% in constant currency terms. Evercore analysts emphasized that this figure incorporates revenue contributions from the Moveworks and Armis transactions, suggesting organic constant-currency expansion sits closer to the low-to-mid 17% range.
The firm indicated that market participants will monitor whether organic cRPO growth finds stability as headwinds from the U.S. federal government customer segment diminish.
Analyst Expectations for Quarterly Performance
Evercore established specific benchmarks for the upcoming Q2 report: constant-currency growth between 20% and 20.5% would satisfy baseline expectations, while results approaching or exceeding 21% could help alleviate concerns regarding organic growth deceleration.
Bernstein maintains an Outperform rating on NOW, characterizing it as the most attractively valued mid-to-large capitalization software stock based on select financial metrics. The firm anticipates a favorable operating environment throughout the second half of 2026.
Benchmark elevated its price target to $130 while maintaining a Buy rating, as Oppenheimer reaffirmed its Outperform stance at $130, pointing to growth acceleration opportunities in the latter portion of the fiscal year.
According to InvestingPro analytics, ServiceNow maintains gross profit margins of 76.56%.
