ServiceNow (NOW) Stock Jumps 8% as Wall Street Buys the Dip — Here’s Why

TLDR

• NOW stock jumped 8.5% as investors bought the dip after a sharp software sector sell-off
• ServiceNow announced a deeper integration with IBM’s watsonx data stack
• BTIG Research reiterated a Buy rating with a $150 price target, implying ~52% upside
• A June 30 legacy pricing deadline could pull forward subscription sales near-term
• NOW is still down 34% year-to-date, trading around $98.64, well below its 52-week high of $211.48

ServiceNow (NOW) stock jumped 8.5% on Friday afternoon as investors stepped back in after a prolonged sell-off in software stocks. The move came as the market appeared to decide the recent downturn had gone too far.

ServiceNow, Inc., NOW

The stock opened Monday at $98.64. It remains down 34% year-to-date and is trading 53% below its 52-week high of $211.48.

The rebound wasn’t just a sentiment call. Several concrete catalysts helped trigger the move, and analysts have been lining up to defend the stock’s long-term case.

ServiceNow announced a deeper integration with IBM, fusing its platform with IBM’s watsonx data stack. The deal strengthens its position as a core operating layer for large enterprises managing AI workflows.

Analyst Price Targets

BTIG Research reiterated its Buy rating on Monday with a $150 price target. That implies roughly 52% upside from current levels.

Benchmark also recently raised its price target to $130, calling NOW one of the cleanest operating models in the SaaS industry and a top large-cap value pick.

Morgan Stanley has an Overweight rating but trimmed its target from $210 to $180. Royal Bank of Canada holds an Outperform rating with a $121 target. Wolfe Research sits at $125.

Across the board, the consensus is Moderate Buy, with 35 analysts rating it a Buy, five at Hold, and one Sell. The average price target sits at $142.17.

Raymond James flagged something worth watching on the near-term calendar: a June 30 legacy pricing deadline. That cutoff could push some customers to lock in subscriptions earlier, potentially boosting sales in the current quarter.

Interest Rates and Software Valuations

Part of Friday’s move had nothing to do with ServiceNow specifically. The 10-year Treasury yield dropped to 4.41%, its lowest since mid-May, following news of a peace deal that would reopen the Strait of Hormuz.

For software companies, that matters. Their valuations are tied to earnings projected years out, so when the discount rate falls, valuations rise — even without a single new contract.

For NOW specifically, that macro relief came at a useful moment. Enterprise customers who had been sitting on purchasing decisions now face a more settled environment heading into the second half of the year.

ServiceNow reported Q1 earnings on April 22. EPS came in at $0.97, matching estimates. Revenue hit $3.77 billion, up 22.1% year-over-year, and slightly above the $3.75 billion consensus.

Return on equity was 18.16%. Net margin was 12.59%. Analysts currently forecast full-year EPS of $2.34.

On the insider front, Director Anita M. Sands sold 16,445 shares in May at an average of $90.14, reducing her stake by 35%. Insider Jacqueline P. Canney sold 8,927 shares in April at $89.60. In total, insiders sold roughly 28,000 shares over the past 90 days.

Institutional investors own 87.18% of the stock. The company carries a market cap of $101.70 billion and a P/E ratio of 58.79.

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