ServiceNow Stock falls by 2025 Outlook as analysts increase the price targets

The stock market introduces a little logic: Unless a public company exceeds the investor’s expectations and raises guidance every quarter, the company’s share price falls.

Thus, it is not surprising to see a decrease of 11.5% in the stock price for the Service-Santa Clara, California-based provider of applications helping companies Bloomberg.

ServiceNow’s stock falls in the wake of a “defective view” for 2025 subscription growth on a slower artificial intelligence -selling, ” Bloomberg noted.

ServiceNow is cheering for the company’s results. “The numbers – you know they are big,” CEO Bill McDermott told me in a January 29 interview.

“2024 was a remarkable year of beats and travel. Q4 was the biggest quarter in our history. Subs beat by 50 basic points. CRPO beat and raised. The margins rose 200 BP in 2024 and our free cash flow margin was 47.8% up from 31%. And we made money with earnings per Stock up 29% – beat consensus, ”he added.

ServiceNow imagines a bright future. “We offered bold guidance affected by the strength of the US dollar,” McDermott explained. “We’ve talked about AI’s speed. I really think the upside of the market has not even been understood! “He added in an E email on January 29.

Drop after earnings in Serviceenow’s stock can be a purchase opportunity as some analysts see the demand for the company’s AI-Infunded Services as a sign of faster growth ahead.

Service’s Performance in the fourth quarter and prospects

Service’s results for the fourth quarter were strong and the company expected a little slower 19% revenue growth in 2025. Nevertheless, the company’s managers imagined significant upside due to “Shakeup caused by artificial intelligence,” according to Wall Street Journal.

The main numbers are as follows:

• Subscription Revenue in the Fourth Quarter: $ 2,866 billion – 21% more than the previous year and 50 bps over the high end of the company’s guidance area, according to a spokesman for a spokesman.
• Q4 Remaining Performance Obligations: $ 22.3 Billion – An increase of 26% from the previous year, the company noted.
• Q4 Current Remaining Performance Obligations: $ 10.27 billion – 22% more than the year before and 50 bps more than guidance, according to the company.
• Q4 Non-GAAP earnings per Equity: $ 3.67 – Up 18% from last year and two cents more than the consensus estimate, says the company.
• Q4 Customers who generate over $ 5 million in annual contract value: nearly 500 – represents 21% annual growth noticed the company.
• 2025 Subscription Revenue forecast: $ 12.7 billion – approx. $ 200 million shortly after the Wall Street Consensus, according to Bloomberg.

ServiceNow incorporates generative AI into its products and changes its pricing method. The company focuses on AI agents – which handle complex tasks, such as planning a holiday and booking of tickets, hotels and restaurants, according to my book, Brain Rush.

ServiceNow is also changing its generative AI-Pris Model-at help of more pay-as-you-go pricing. The change will mean “to go in advance incremental new subscriptions to instead drive accelerated adoption and make money increasing the use over time,” the company told Bloomberg.

Demand for ServiceNows Agentic AI services are increased. “We have experienced 150% quarter on quarterly agent AI growth,” McDermott told me. “We drink our own champagne. It gives us 20% productivity increases in sales, customer service, human resources and it supports, ”he added.

While companies are still looking for a killer -App to generative AI – which In my opinion Would happen if generative AI could help a company grow revenue faster than investors expect – ServiceNow could be at the forefront of making this vision a reality.

This is because the company says that generative AI helps the company transform potential customers into buyers far more efficiently. “Over the past six months, our walk to the market prospectus conversion rate has risen 16 times,” McDermott told me.

“Our chatbots handle 80% of customers who don’t need a person. We give our sellers the highest potential 20% of the leaders. This saves 200,000 hours of sellers time and enables sixteen times better conversion of top views to offers, ”he added.

Where the ServiceNow share goes next time

Wall Street is modestly optimistic in terms of ServiceNow shares. Based on 29 Wall Street analysts offering 12-month price targets, the company’s shares are 4.5% underestimated in view of their average target of $ 1,194.48, according to TiPranks.

Still, some analysts are more bullish.

Canaccord Genuity raised its price target for the company for $ 1,275. Following Service’s recent earnings call and follow -up discussions with management, the company considers the company’s position as strong.

Serviceenow’s high profit margin, “The acceleration of its AI and Agent initiatives, and the potential of the pricing model to capture additional upside as AI -adoption increases,” all Service’s growth options strengthen, “noticed Canaccord Genuity Analyst Richard Davis, according to Investing.com.

Various other analysts are bullish. Needham -Analysts raised their price target for ServiceNow by 25% to $ 1,500, while JMP Securities maintained a price target of $ 1,300, Investing.com noted.

Not all analysts were so optimistic. Service’s “Significant” Pricing Structure Structure Change May Damage the Results, Vital Knowledge Analysta told Adam Crisafulli told CNBC.

If Serviceenow’s AI agents and new pricing strategy result in faster than expected revenue growth, today’s stock price fall may ultimately be a good purchase opportunity.