Evercore ISI reiterates Outperform on ServiceNow stock ahead of earnings

Evercore ISI reiterated an Outperform rating on ServiceNow with a $150.00 price target despite the stock trading at $99.28 (down ~51% YoY). Ahead of Q2 earnings, the company’s Financial Analyst Day laid out a path to >$30B in subscription revenue by FY2030 (implying ~17.5% subscription revenue CAGR) and guided Q2 current remaining performance obligations (RPO) growth of ~19.5% constant currency, including inorganic contributions from Moveworks and Armis (organic closer to low-to-mid 17%). Analysts say the key near-term question is whether organic RPO growth stabilizes as federal pressure eases and AI adoption expands.

Analysis

The market is trading NOW less as an AI story and more as a trust deficit story: with a premium software multiple, any ambiguity around organic bookings is enough to keep the stock “cheap” for longer than the sell-side targets imply. The key mechanism is valuation asymmetry — if organic cRPO is stuck in the mid-teens, the stock can stay range-bound even if headline growth looks fine, because investors will assume acquisition-led growth is less durable and less scalable.

Competitive dynamics matter more than the company’s messaging suggests. If NOW can prove that AI packaging is driving incremental wallet share rather than just re-labeling existing modules, it can pull spend from adjacent workflow and service-management budgets across CRM, HUBS, and parts of the MSFT ecosystem. The second-order winner may be implementation and cloud infrastructure partners, while the loser set is smaller point-solution vendors whose feature set gets absorbed into a broader platform.

Catalyst-wise, the next 1-3 months are all about the print and the organic/inorganic bridge; beyond that, the 6-18 month setup hinges on whether AI monetization becomes measurable in renewal mix and deal size. The contrarian view is that the stock may already reflect too much skepticism: down sharply, with very high gross margin still intact, a merely “good enough” print could trigger multiple repair. What would falsify that view is another quarter of low-to-mid teens organic growth plus vague guidance, which would keep the multiple compressed despite any AI narrative.

Key Decisions for Investors

• Tactically long NOW into earnings only if positioning is paired with a hedge versus IGV or XLK; risk/reward is roughly 2:1 if cRPO stabilizes above 20.5% and the organic bridge is clean, but downside is still 15-20% on another execution miss.
• If you want a cleaner event trade, use a 1-2 month NOW call spread rather than outright common stock; this limits theta bleed if management only meets, rather than beats, the Street.
• Pair trade: long NOW / short CRM or HUBS as a relative-value expression on platform consolidation, with the long leg dependent on evidence that NOW is taking share from point solutions rather than just smoothing revenue with M&A.
• Set a watch level on the organic growth bridge, not the headline number: if organic cRPO remains in the low-to-mid teens, fade analyst target upgrades and expect the multiple to stay depressed.