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How Do Analysts View ServiceNow?

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Average price target of $207.96

William Fitzsimmons from Morningstar raised ServiceNow’s (NOW) price target from $221 to $195 and expected the company’s revenues to double in the short term. The analyst expects ServiceNow to post revenues of ~$4.0 billion in fiscal 2020 and that it could reach the $10.0 billion mark by fiscal 2027.

Shortly after ServiceNow reported its Q2 results, Canaccord Genuity analyst Richard Davis wrote, “This quarter did not alter our now six-year-old assertion that this is a special company that is likely to scale to become a significant platform.”

Of the 34 analysts tracking ServiceNow, 30 recommend a “buy,” and four recommend a “hold.” There were no “sell” recommendations. Driven by robust revenue growth, improving margins, and the total available market, most analysts remain optimistic about ServiceNow.

Will ServiceNow be able to beat competition from tech giants?

We have seen the key revenue drivers for ServiceNow, and its business model that has resulted in an impressive retention rate as well as recurring sales. However, can ServiceNow beat larger companies in this space?

ServiceNow faces competition from Microsoft’s (MSFT) SCSM (Service Center System Manager). The SCSM is also an IT service management tool. According to an August 31 report, tech giants IBM (IBM), Cisco (CSCO), and CA Inc. (CA) have also entered into this business. However, the high cost of switching is expected to benefit ServiceNow and offset any current competition threats.

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