Macquarie Initiates ServiceNow at Neutral With $860 Target on Valuation Concerns

Overview

• Macquarie began coverage of ServiceNow on November 25 with a Neutral rating and an $860 price target, describing it as a great company but only a fair stock at current levels.
• The firm points to strong fundamentals, highlighting fiscal 2024 subscription revenue of $10.646 billion up 23%, a mid‑50s Rule of 40 score, and a 31% free‑cash‑flow margin.
• Risks flagged include integration and execution challenges as ServiceNow expands beyond IT service management into customer service, HR, compliance, and industry workflows, along with persistent SaaS valuation pressure.
• Potential catalysts identified are upcoming results, fiscal 2026 guidance, and clearer updates on AI monetization plans.
• Recent product momentum includes new Microsoft integrations—Agent 365, AI Control Tower, and Build Agent—and planned Now Assist connections to Microsoft 365 apps with general availability targeted by year‑end.