It's been a good week for ServiceNow, Inc. (NYSE:NOW) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.8% to US$957. Revenues were US$2.8b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$2.07, an impressive 31% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ServiceNow after the latest results.
After the latest results, the 38 analysts covering ServiceNow are now predicting revenues of US$13.2b in 2025. If met, this would reflect a major 26% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 29% to US$8.37. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$13.2b and earnings per share (EPS) of US$8.07 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 9.3% to US$991, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values ServiceNow at US$1,105 per share, while the most bearish prices it at US$716. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ServiceNow shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 20% growth on an annualised basis. That is in line with its 22% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So it's pretty clear that ServiceNow is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ServiceNow's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for ServiceNow going out to 2026, and you can see them free on our platform here..
You still need to take note of risks, for example - ServiceNow has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
