ServiceNow (NYSE:NOW), a cloud-based workflow automation platform, has impressed investors with its consistent performance. NOW stock has advanced 63% over the past year and Wall Street analysts are bullish about its growth ahead. Analysts are upbeat on ServiceNow’s solid business momentum and the robust potential of the company’s artificial intelligence (AI) products.
ServiceNow’s Impressive Financials
ServiceNow’s automation platform enables enterprises to boost their efficiencies by streamlining and automating routine work tasks. The company’s Fiscal 2023 financials reflect the solid demand for its offerings.
NOW’s revenue increased 24% to $8.97 billion in Fiscal 2023, with subscription revenue rising 26% to $8.68 billion. Remarkably, the company’s Remaining Performance Obligations (RPO), a key indicator of future revenue, stood at $18 billion at the end of Fiscal 2023 and reflected a growth of 29%. Further, ServiceNow’s free cash flow (FCF) increased by 30% to $2.73 billion in Fiscal 2023.
The company had more than 8,100 customers at the end of the year, with 1,897 customers paying over $1 million in annual contract value (ACV).
Looking ahead, ServiceNow expects strong momentum in its business, driven by its generative AI products like Now Assist.
Analysts Positive on NOW’s Potential
Following a recent meeting with a large ServiceNow partner, Oppenheimer analyst Brian Schwartz reiterated a Buy rating on NOW stock with a price target of $825. One of the key takeaways was that NOW is well-positioned to disrupt the market with AI-enabled business process automation.
Likewise, Jefferies analyst Samad Samana increased his price target for ServiceNow stock to $900 from $885 and reaffirmed a Buy rating. The analyst pointed out that the company invested in AI way before the generative AI frenzy began. He noted that ServiceNow has completed about 12 AI and machine language (ML)-related tuck-in acquisitions since 2018.
Samana added that the company has entered into key partnerships with other leading players in the AI race, including Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Hugging Face (a machine learning and data science platform).
Overall, Samana is confident that ServiceNow will at least meet the target of generating more than $15 billion in revenue by 2026.
What is the Stock Price Prediction for ServiceNow?
Wall Street is highly bullish on ServiceNow stock, with a Strong Buy consensus rating based on 29 Buys versus just one Hold recommendation. At $856.57, the average NOW stock price target indicates 11.4% upside potential.
Conclusion
ServiceNow’s workflow automation platform is gaining additional customers at a strong growth rate, reflecting a robust increase in its revenue in the years ahead. Analysts expect the company’s AI products to further boost the top line and profitability.
As per TipRanks’ Smart Score System, ServiceNow scores a nine out of 10, implying the stock has the ability to outperform the broader market over the long term.
