ServiceNow’s Analyst Day Struck a Confident Tone in a Choppier Market

By Senad Karaahmetovic

ServiceNow (NYSE:) held its Analyst Day yesterday where it raised FY24 and FY26 targets from the prior mid-term guidance issued last year.

The company is now looking for over $11 billion in subscription revenues, up from the prior forecast of $10 billion and more. Similarly, the FY26 subscription revenue target is raised to $16 billion from $15 billion.

For Citi’s Tyler Radke, ServiceNow’s analyst day struck a confident tone in a choppier market.

“We reiterate our Buy rating as we see NOW poised to continue to deliver hi-20s to 30%+ organic growth at scale with continued margin expansion as it leverages a large enterprise install base with a broadening portfolio of new products that can help modernize key organizational workflows,” the analyst said in a client note.

Evercore ISI analyst Kirk Materne believes NOW is “in a unique position to become the ‘platform of digital business’ and why its growth is durable even in a more uneven macro backdrop.”

“While we expect software could remain at the mercy of the broader market in the near-term (NOW included), we believe the six-month outlook for some of the scaled, cash generative SaaS names looks extremely attractive at current levels and this includes NOW,” Materne added.

BMO analyst Keith Bachman also reiterated an Outperform rating on NOW shares.

“While we remain defensive, given that NOW currently trades at a reasonable FCF valuation of about 28x EV/FY23 FCF, we think NOW stock is intriguing even in a weak tech tape,” the analyst told clients in a note.