Price Target Adjustment#
Raymond James has lowered its price target for ServiceNow stock (NYSE:NOW) from $160 to $130, while still maintaining an Outperform rating. Analyst Michael Turtis pointed out that there is a narrower upside across key growth metrics following the company's first-quarter 2026 results.
Factors Behind the Change#
The adjustment comes as a result of several factors, including challenges with integrating acquisitions, differences in accounting practices, and delays in deals within the Middle East region. These issues have created a mismatch between what investors expected and the company's guidance. Currently, ServiceNow's stock is trading at $103.07, reflecting a significant decline of 45% over the past six months and 33% year-to-date from its 52-week high of $211.48.
Growth and Profitability#
Despite the price target reduction, Raymond James noted that ServiceNow's organic growth outlook remains largely unchanged. The company has increased its expectations for AI-related Annual Contract Value (ACV) by 50%, suggesting that artificial intelligence is becoming a more integral part of its business model. ServiceNow continues to deliver over 20% growth with a free cash flow margin in the mid-30% range and maintains a strong gross profit margin of 77.5% on revenues of $13.3 billion.
Strategic Developments#
In recent news, ServiceNow has completed its $7.75 billion acquisition of Armis, a company focused on cyber exposure management and security solutions. This follows another acquisition of Veza earlier in March 2026. Additionally, ServiceNow has expanded its partnership with Google Cloud to introduce AI solutions aimed at automating operations across various sectors, including retail and 5G networking. Despite broader economic challenges, RBC Capital has highlighted ServiceNow's solid quarterly performance, which has exceeded investor expectations.