ServiceNow (NOW) Stock: Is this Pullback a Buying Opportunity?

TLDR

• Cantor Fitzgerald reiterates Overweight rating with $240 price target, citing ServiceNow trades at 8.5x projected 2027 revenue, near three-year valuation low
• Stock down 17% over past year to $850-860 range from January 2025 high of $1,198, but Q3 revenue hit $3.41 billion with 22% year-over-year growth
• Analysts project 2027 growth could exceed current 18% consensus estimates driven by seat expansion, federal business strength, and AI momentum
• Company’s AI platform targeting $1 billion in annual contract value by end of 2026 as management emphasizes AI-driven upsell opportunities
• Board approved 5-for-1 stock split in late 2025 to improve retail investor access after beating estimates and raising guidance

ServiceNow shares have retreated from their January 2025 peak. The stock now trades around $850-860, down roughly 17% over the past year.

ServiceNow, Inc., NOW

The pullback has caught the attention of Wall Street analysts. Cantor Fitzgerald’s Thomas Blakey reiterated an Overweight rating on January 5 with a $240 price target.

The current valuation tells an interesting story. ServiceNow is trading at 8.5x projected 2027 revenue, marking a three-year low for the stock’s valuation multiple.

Recent financial performance shows continued strength. The company reported third-quarter revenue of $3.41 billion, up 22% year-over-year. Earnings per share came in at $0.96 versus $0.74 in the prior year.

Both metrics beat consensus estimates. Subscription revenue reached $3.3 billion, growing about 20.5% in constant currency. Non-GAAP operating margin expanded to 33.5%.

Growth Drivers Gaining Traction

Cantor Fitzgerald sees multiple catalysts ahead. The firm points to seat growth as a key driver, with more organizations expanding their ServiceNow deployments across departments.

Federal sector business has exceeded expectations. This segment continues to deliver stronger-than-anticipated results as government agencies modernize their workflows.

The AI story is gaining momentum. Management targets $1 billion in annual contract value from the ServiceNow AI platform by the end of 2026. The company is building out its AI data stack with enhanced governance and security features.

Mergers and acquisitions activity is picking up. Cantor notes this trend isn’t about buying growth but rather expanding the total addressable market for ServiceNow’s platform.

Looking Ahead to 2027

Consensus estimates currently project 18% revenue growth for 2027. Cantor believes this figure could prove conservative based on current trends.

The firm sees potential for upside driven by the combination of seat expansion, federal momentum, AI adoption, and M&A tailwinds. Current-quarter revenue estimates sit around $3.52 billion, representing 19% year-over-year growth.

Full-year 2026 projections call for EPS growth exceeding 20%. This reflects continued platform scaling and AI-driven upsell opportunities. Management acknowledges macro and IT-spending risks remain on the radar.

Consensus analyst price targets cluster around $1,140. Individual targets range from $734 on the low end to $1,300 on the high end. These figures imply upside from current trading levels if forecasts materialize.

The company completed a 5-for-1 stock split in late 2025. The move came after a quarter that beat estimates and included raised guidance. The board aimed to improve retail investor access to the shares through the split.

Cantor Fitzgerald maintains its view that ServiceNow’s recent acquisitions expand market opportunities. The firm observed this strategy aligning with themes from the Knowledge 2025 conference. ServiceNow shares recently traded with a market cap reflecting the combination of near-term pressure and long-term growth expectations.

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