Analysts positive on ServiceNow ahead of Q1 earnings

By Davit Kirakosyan

Several Wall Street analysts provided their outlook on ServiceNow (NYSE:) ahead of the company’s upcoming Q1/23 earnings release, scheduled on April 26.

Citi raised its price target on the company to $562.00 from $506.00 while maintaining a Buy rating, noting that its partner checks pointed to mostly resilient business trends, with some instances of favorable pull-in dynamics and fewer deal slippage issues that were seen last year.

The firm expects a slight Q1 beat to the key cc CRPO metric, at least in-line Q2 guidance, and a slight raise to the 2023 outlook.

According to the firm, ServiceNow is well-positioned to continue to drive 20%+ top-line growth with healthy margin expansion driven by continued product line expansions across broader IT and line-of-business workflows.

Meanwhile, BofA Securities raised its price target to $600.00 from $525.00 while maintaining a Buy rating.

Following their calls with nearly a dozen key partners, BofA analysts concluded that deal activity and pipeline builds are sustained with solid Q4 levels. Most partners characterized deal activity tracking above expectations, with balanced results across NA and Europe.

The firm remains comfortable with its Q2 cRPO and fiscal 2023 cc growth of 24% year-over-year and 23%, respectively, given channel commentary for healthy pipeline builds and stable sales cycles.

Oppenheimer also provided a preview on upcoming Q1, noting that its field checks, the set-ups, and read-throughs from company data analysis point to an in-line to modest upside to Q1 CRPO results, operating margin, and guidance offset by a low magnitude to upside and fair valuation.