Key Takeaways:
ServiceNow shares dropped 16.2 percent this week to $106.97, extending a 30 percent year-to-date decline as a new Federal Reserve chair takes office and the software sector faces a broad derating.
"The selloff reflects macro rotation out of long-duration software, not a fundamental break in the business," Oppenheimer analysts said after meeting with ServiceNow management, reiterating an Outperform rating and $130 price target. The firm cited AI, security, Control Tower, and CRM as growth drivers positioning the company as a compounder.
The stock now trades at 28 times forward earnings, down from a trailing multiple of 68, against guidance for $15.53 billion to $15.57 billion in 2026 subscription revenue — growth above 20 percent. ServiceNow posted $3.57 billion in fourth-quarter revenue, a 20.7 percent increase year over year, with earnings per share of $0.92 beating the $0.89 consensus. Current remaining performance obligations climbed 25 percent to $12.85 billion, and free cash flow surged 44.7 percent to $2 billion.
Of 48 analysts covering ServiceNow, 43 rate the stock a Buy, with nine at Strong Buy and 34 at Buy. Four rate it Hold and one rates it Sell. The consensus price target of $141.86 implies roughly 33 percent upside from current levels. The board authorized a $5 billion share repurchase program, including a planned $2 billion accelerated buyback.
Bears point to a broken chart — the stock sits below both its 50-day moving average of $99.27 and its 200-day at $139.86, down 47.9 percent over one year. Subscription gross margin slipped 200 basis points to 82.5 percent as AI infrastructure scales, and a 150-basis-point headwind from a self-hosted to hosted mix shift looms in the first quarter.
The decline puts ServiceNow at its lowest since early 2025, testing the $100 support level. The next catalyst is first-quarter results due in spring, where cRPO and subscription growth will determine whether the multiple can reset.
This article is for informational purposes only and does not constitute investment advice.
