ServiceNow's Q3 Beats Expectations, Driven by Strong Execution and AI Strategy
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Following its Q3 results and future forecasts coming in ahead of market expectations, ServiceNow Inc. (NYSE:NOW) had strong responses from analysts, which drove a pre-market stock increase of 1%. Key elements driving the company's "solid beat and raise quarter," analysts noted, were its strong execution and client demand.
Maintaining a $1,075 price target and a Buy rating, BofA highlighted ServiceNow's expansion in customer and staff workflow solutions. The company observed that showing sustainable development, the current Remaining Performance Obligation (cRPO) increase of 23.5% exceeded its 22% expectation. The bank also said that strong customer resonance from ServiceNow's efforts in important areas is paying off.
Morgan Stanley, meantime, confirmed its equal-weight rating with a $960 target, noting the company's strong generative artificial intelligence posture. Analyzers pointed out, nonetheless, a slowing down in cRPO growth relative to Q2 and suggested a possible slowing down in Q4. Still, they underlined ServiceNow's strong foundation for monetizing generative artificial intelligence solutions by 2025.
Following in line, Stifel and RBC raised their price estimates to $990 and $1,045, respectively. Praising the company's platform strength, rising acceptance of ProPlus and Now Assist, and its recently launched Workflow Data Fabric, RBC called Q3 a "Home Run Of A Quarter." Q3 results of ServiceNow and future direction highlight its strong position in important growth sectors, including government contracts and generative artificial intelligence, which analysts feel will propel momentum into 2025.
This article first appeared on GuruFocus.