ServiceNow (NOW) Stock Surges 4% Following Guggenheim’s Upgrade to Buy Rating

Quick Summary

• Guggenheim shifted its stance on ServiceNow from Neutral to Buy, establishing a $125 price target that propelled shares 4% higher Wednesday
• Shares have declined approximately 35% since Guggenheim’s December 2025 upgrade from Sell to Neutral
• Evercore ISI reaffirmed its Outperform stance with a $150 price target as Q2 earnings loom
• Management projects Q2 current remaining performance obligations (cRPO) growth at roughly 19.5% on a constant currency basis
• At its Financial Analyst Day, the enterprise software provider mapped out a trajectory toward exceeding $30 billion in subscription revenue by FY 2030

ServiceNow (NOW) experienced a 4% surge Wednesday following Guggenheim analyst John DiFucci’s decision to elevate his rating from Neutral to Buy, accompanied by a $125 price objective.

ServiceNow, Inc., NOW

Shares were positioned at $99.28 entering Wednesday’s trading session — reflecting a steep 51% decline year-over-year — positioning that $125 projection as a substantial upside opportunity.

DiFucci assigned NOW a valuation of 7.5x EV/NTM Recurring Revenue, representing a premium versus most SaaS comparables, though Guggenheim contends this multiple is warranted considering the firm’s profitability profile and anticipated double-digit expansion.

The rating enhancement arrives after a challenging period. Following Guggenheim’s transition of NOW from Sell to Neutral in December 2025, the stock plummeted 35% — significantly underperforming the IGV software index’s 16% decline and the S&P 500’s 10% advance during the identical timeframe.

DiFucci acknowledged that AI revenue generation remains distant, and AI-related challenges — particularly talent migration to AI-native ventures — represent genuine concerns. However, the firm refrained from characterizing AI as a fundamental threat to operations.

Guggenheim additionally highlighted ServiceNow’s substantial dependence on M&A activity, including its Armis transaction, to drive expansion as a factor warranting investor scrutiny.

Evercore Maintains $150 Projection Before Q2 Results

In a separate action, Evercore ISI confirmed its Outperform designation on NOW with a $150 price objective as the company approaches its Q2 financial disclosure.

Evercore indicated the discussion has transitioned from long-term AI strategy to immediate-term execution following ServiceNow’s recent Financial Analyst Day presentation.

During that gathering, ServiceNow unveiled its AI Control Tower framework, AI-native product packaging, and a subscription revenue objective surpassing $30 billion by fiscal year 2030 — suggesting a compound annual growth rate of approximately 17.5%.

Management provided Q2 cRPO growth guidance of approximately 19.5% in constant currency terms. However, Evercore emphasized that this metric incorporates contributions from the Moveworks and Armis transactions, positioning organic constant-currency expansion nearer to the low-to-mid 17% territory.

Evercore stated market participants will monitor whether organic cRPO growth stabilizes as headwinds from the U.S. federal government segment diminish.

Analyst Expectations for Upcoming Report

The firm established explicit benchmarks for the Q2 announcement: constant-currency growth between 20% and 20.5% would register as satisfactory, while performance approaching 21% or higher could alleviate worries about organic deceleration.

Bernstein similarly maintains an Outperform designation on NOW, characterizing it as the most attractively valued mid/large cap software stock based on select financial measurements. The firm anticipates a positive environment for the second half of 2026.

Benchmark elevated its price objective to $130 with a Buy recommendation, while Oppenheimer reaffirmed Outperform at $130, highlighting growth prospects in the year’s latter portion.

ServiceNow’s gross profit margins register at 76.56%, per InvestingPro data.

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