Shares of ServiceNow Inc (NYSE:NOW) tanked in early trading on Thursday, despite the company reporting upbeat first-quarter results on Wednesday.
Here are the key analyst insights:
- Goldman Sachs analyst Gabriela Borges reiterated a Buy rating, while slashing the price target from $188 to $163.
- Needham analyst Mike Cikos reaffirmed a Buy rating, while cutting the price target from $155 to $115.
- BTIG analyst Allan Verkhovski maintained a Buy rating, while lowering the price target from $185 to $150.
- JPMorgan analyst Mark Murphy reiterated an Overweight rating, while slashing the price target from $195 to $145.
Check out other analyst stock ratings.
Goldman Sachs: ServiceNow guided to cRPO (current remaining performance obligations) growth of 19.5% year-on-year in constant currency terms for the second quarter, which implies around 17.25% organic growth, reflecting a slowdown from the first quarter's organic growth of around 20.0%, Borges said in a note.
Management indicated that the guidance was conservative due to the geopolitical situation that had led to "a few slipped on-premise deals in the Middle East" in the first quarter, she added.
"1Q is a seasonally weak quarter for Software and the buying cycles are likely becoming more back half weighted (as deal cycles get bigger and AI products may go through more testing/implementation), and 2Q26 faces harder yoy comps," the analyst wrote. Several software companies have exposure to the Middle East and are likely to have witnessed similar disruptions during the first quarter, she stated.
Needham: ServiceNow reported cRPO of $12.64 billion for the first quarter, beating Street expectations of $12.56 billion, Cikos said. cRPO growth came in at 22.5% year-on-year, or 21% in constant currency, around 100 basis points (bps) higher than management’s guidance of 20%, he added.
Investors had been hoping for a clean beat and raise quarter, the analyst stated. He noted, however, that the company's message was "muddied" by:
- A 75bps subscription revenue headwind from delayed On-Premise deals in the Middle East
- Inorganic contribution to first-quarter cRPO from the closing of the Pyramid and Veza acquisitions
- Guidance reflecting a decelerating in organic cRPO growth in the second quarter
- Armis contribution falling below expectations
BTIG: While the first quarter has historically been a quiet one for ServiceNow, this year it was "exceptionally noisy," Verkhovski said. The company not only reported delays in on-premise deals in the Middle East, but also indicated margin compression from the integration of Armis, he added.
Management's full-year guidance reflects a reduction of around $21 million in organic subscription revenue in constant currency terms, the analyst stated. "Furthermore, Q2 organic CC cRPO growth guidance of ~18% excluding newly closed M&A missed consensus expectations of 18.9%," he wrote.
JPMorgan: There are no "material issues" with ServiceNow's first-quarter performance or 2026 guidance, Murphy said. He added, however, that the second-quarter organic cRPO guidance of 17.3% growth in constant currency was disappointing.
For the past several quarters, ServiceNow has been guiding to constant-currency organic cRPO growth at around 19% and reporting at around 20%, the analyst stated. Now that the guidance is at around 17.3% for the second quarter, the company is unlikely to report growth close to 20%, "thus likely falling below a psychological growth-territory threshold," he stated.
NOW Price Action: ServiceNow shares were down 15.94% at $86.63 at the time of publication on Thursday. The stock is near its 52-week low of $81.23, according to Benzinga Pro data.
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