By Senad Karaahmetovic
ServiceNow (NYSE:NOW) 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 (TSX: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.