BMO Capital has trimmed its price target for ServiceNow (NYSE:NOW) to $170.00 from $175.00, while keeping an Outperform rating on the stock. The firm described the company's fourth quarter as "solid if unspectacular" and said the firm's fiscal year 2026 current-currency subscription revenue guidance, excluding mergers and acquisitions, was broadly in line with consensus expectations.
ServiceNow shares are trading at $129.62, a substantial drop from a 52-week peak of $234.08. Data cited in coverage shows the stock has fallen more than 43% over the past year.
BMO's note emphasized a number of company metrics that paint a mixed picture for investors. The shares command a high price-to-earnings multiple of 78.6, even as ServiceNow continues to deliver notable profitability and growth: gross profit margins of 78.05% and revenue growth of 21.05% in the last twelve months.
On user metrics, management reported 25% year-over-year monthly active user (MAU) growth in the December quarter. BMO interpreted that result as evidence that counters bearish narratives around seat contraction.
The research team also suggested that how ServiceNow trades in the near term could serve as a barometer for software stocks more broadly. They framed that view around what they called a solid quarter and guidance set against what they see as an attractive free cash flow valuation.
Despite the modest reduction in the price target, BMO reiterated its Outperform rating, pointing to the company's performance across revenue, margin and user metrics.
Recent earnings and analyst reactions
ServiceNow reported fourth-quarter 2025 results that topped expectations. The company posted earnings per share of $0.92 versus a forecast of $0.89, and reported revenue of $3.57 billion compared with anticipated revenue of $3.53 billion.
In response to the results, Jefferies reiterated a Buy rating on ServiceNow, citing strong subscription revenue performance and the company's ability to beat guidance on currency-adjusted subscription revenue and operating margin. Separately, RBC Capital kept an Outperform rating but lowered its price target to $185 from $195 - a move the firm linked to negative investor sentiment despite describing the quarter as a "clean beat" and noting a positive initial calendar-year 2026 organic outlook.
Taken together, these developments reflect ongoing strong operating performance at ServiceNow alongside mixed sentiment among analysts and investors about near-term valuation and market positioning.
Implications for investors
- ServiceNow's operational metrics continue to justify positive analyst views, even as the stock trades substantially below its 52-week high.
- High valuation multiples coexist with robust margins and revenue growth, creating a tension between growth fundamentals and investor sentiment.
- Analyst reactions are varied: several firms maintain constructive ratings while adjusting price targets to reflect market sentiment.