ServiceNow slips as Mizuho cuts target

[ServiceNow headquarters in Santa Clara, California, USA]
JHVEPhoto

ServiceNow (NYSE:NOW [https://seekingalpha.com/symbol/NOW]) shares slipped 2% on Tuesday as investment firm Mizuho cuts its price target on the enterprise software giant.

“While NOW is widely viewed more positively than other enterprise application names at this time, we note that it is certainly not immune to the structural challenges posed by seat-based pricing models,” Mizuho analysts wrote in a note to clients. “In the event that notable seat-based headwinds do come to fruition, we believe continued best-in-class execution will be necessary to maintain the valuation premium that NOW commands.”

On the prospects of artificial intelligence, Mizuho analysts see it as a “modest net positive” for ServiceNow, noting its Assist Picks feature has helped.

“Agentic AI from NOW is being monetized through its Assist Packs, as customers can purchase 'Assist' tokens that are consumed as agents take action,” the analysts added. “Earlier this year on its 4Q24 earnings call, [management] stated that consumption for Agentic AI interactions will be 'multiples higher' than standard Now Assist queries, and that it fully anticipates a 'hockey stick' effect to kick in at some point (as it believes usage trends will significantly build over time, along with its ability to additionally monetize). While the [company] has stated that material monetization won't kick in until the end of 2026 or during 2027, the usage so far has been better than expected.”

Mizuho cut its price target on ServiceNow to $1,100 from $1,200 but reiterated its Outperform rating.

MORE ON SERVICENOW

* ServiceNow Wins Vs Salesforce In Enterprise [https://seekingalpha.com/article/4821514-servicenow-wins-vs-salesforce-in-enterprise]
* ServiceNow: High Valuations, High Expectations [https://seekingalpha.com/article/4821023-servicenow-high-valuations-high-expectations]
* ServiceNow: Better Buying Opportunities Ahead (Downgrade) [https://seekingalpha.com/article/4820411-servicenow-better-buying-opportunities-ahead-downgrade]
* Markwayne Mullin discloses purchases of Texas Instruments, ServiceNow, Adobe, more [https://seekingalpha.com/news/4501425-markwayne-mullin-discloses-purchases-of-texas-instruments-servicenow-adobe-more]
* Notable analyst calls this week: J&J, Intel and Adobe among top picks [https://seekingalpha.com/news/4499578-notable-analyst-calls-this-week-jj-intel-and-adobe-among-top-picks]