TLDR

• Bernstein reaffirmed an Outperform rating on ServiceNow with a $219 price target, calling it a “discount large cap growth” opportunity trading at 6 times revenue
• Cantor Fitzgerald maintained an Overweight rating with a $200 price target while Stifel cut its target from $200 to $180 but kept its Buy rating
• ServiceNow’s Q4 revenue jumped 20.5% to $3.57 billion with adjusted EPS rising 26% to $0.92, beating analyst expectations
• The company’s AI product Now Assist reached $600 million in annual contract value and is targeting over $1 billion by end of 2026
• ServiceNow forecast Q1 subscription revenue growth of 21.5% and full-year subscription revenue between $15.53 billion and $15.57 billion

ServiceNow shares dropped in after-hours trading following its January 29 earnings report. But Wall Street analysts aren’t backing away from the stock.

ServiceNow, Inc., NOW

The selloff came despite strong fourth-quarter results that beat expectations. Revenue climbed 20.5% year over year to $3.57 billion. Adjusted earnings per share jumped 26% to $0.92, topping the analyst consensus of $0.88 on revenue of $3.53 billion.

Subscription revenue rose 21% to $3.47 billion. Professional services revenue increased 13% to $102 million.

Multiple firms maintained positive ratings on the stock after the earnings release. On January 29, Cantor Fitzgerald kept its Overweight rating with a $200 price target.

Stifel reduced its price target from $200 to $180 but maintained a Buy rating. Analyst Brad Reback noted the quarter “played out largely as expected” with an organic upside of around 100 basis points. He mentioned that fourth-quarter checks were “somewhat mixed.”

The firm called ServiceNow “an interesting value” at current levels. The stock trades at about 6 times revenue and 16 times free cash flow. Stifel pointed out that a broader shift in investor sentiment would be needed for a re-rating.

AI Products Drive Growth

ServiceNow’s AI suite Now Assist hit a $600 million annual contract value milestone. The company expects this to grow to over $1 billion by the end of 2026.

The company is acquiring AI cybersecurity firms Armis and Veza. These deals aim to tie security and AI capabilities together.

Remaining performance obligations increased 26.5% to $28.2 billion. Current RPO rose 25% to $12.85 billion. This metric combines deferred revenue and backlog, serving as an indicator of future revenue growth.

Ratings Pile Up After Market Selloff

Bernstein stepped in on January 30 with an Outperform rating and $219 price target. This came after a sharp market selloff.

The firm called ServiceNow a “discount large cap growth” opportunity. It noted the stock looks cheap compared to other large software companies with more than $50 billion in market cap when examining three-year growth against price-to-free-cash-flow.

Bernstein said the premium typically given to growth stocks has “collapsed further.” This makes ServiceNow’s valuation gap even wider when compared to other large-cap growth software stocks.

For the first quarter, ServiceNow forecast subscription revenue growth of 21.5% to between $3.650 billion and $3.655 billion. The company expects current RPO to increase 22.5%.

Full-year subscription revenue is projected at $15.53 billion to $15.57 billion. This represents growth of 20.5% to 21%.

CEO comments on the earnings call addressed AI concerns directly. He stated that AI will not “replace enterprise orchestration” and called it a huge opportunity. The company’s unified data system and structured workflows position it as an ideal environment for AI agents.

ServiceNow shares currently trade at $117.56 with a market cap of $123 billion. The stock has a 52-week range of $113.13 to $211.48.

ServiceNow’s AI Control Tower platform is positioning the company as an orchestration platform for agentic AI while its Now Assist product line continues expanding its annual contract value.