ServiceNow: Raymond James Initiates Coverage with 'Outperform' Rating

ServiceNow, a leading provider of digital workflow platforms, has received a boost in investor confidence with Raymond James initiating coverage of the company with an "outperform" rating. The brokerage firm assigned a price target of $1,200 for ServiceNow stock, implying a 10% gain from its last close. This positive outlook is driven by ServiceNow's strong growth prospects at scale and its potential in artificial intelligence monetization.

Raymond James highlighted ServiceNow's ability to sustain 20%-plus growth at a $10 billion revenue scale, drawing parallels to software giants like Microsoft, Salesforce, and Adobe. This impressive growth trajectory is supported by ServiceNow's diversification into customer and employee workflows, along with high client retention and expansion rates. The company's broad range of solutions, including asset management, cloud observability, and integrated risk management, caters to various industries and customer needs, ensuring long-term growth durability.



AI opportunities, including Generative AI and new solutions like Workflow Data Fabric, are expected to drive incremental revenue and solidify ServiceNow's role as a data system of record. Generative AI, such as Now Assist, has secured 44 clients each spending over $1M in Q3 2024, demonstrating tangible monetization opportunities. Workflow Data Fabric is anticipated to further enhance ServiceNow's position by providing a comprehensive data management solution.



ServiceNow's strong financial performance and growth prospects are reflected in Raymond James' valuation of 16 times estimated 2026 revenue. This valuation indicates the brokerage's confidence in ServiceNow's ability to maintain high growth rates and generate substantial cash flows. The company's focus on innovation, customer satisfaction, and continuous improvement ensures that it remains a strong player in the digital transformation market.

In conclusion, Raymond James' initiation of coverage with an "outperform" rating and a $1,200 price target for ServiceNow stock highlights the company's impressive growth prospects and potential in AI monetization. With a strong track record, diverse product offerings, and a commitment to innovation, ServiceNow is well-positioned to continue its growth trajectory and solidify its market leadership.