ServiceNow Inc (NYSE:NOW) shares are climbing Tuesday. Oppenheimer raised its price target while maintaining its rating. Here’s what you should know.
- ServiceNow shares are trending higher. What’s driving NOW shares up?
Oppenheimer Raises Price Target to $165, Keeps Outperform
Oppenheimer analyst Brian Schwartz reaffirmed Outperform on ServiceNow and moved the price target up to $165 from $140. The firm’s earnings preview digs into federal demand and the company’s CRPO.
Schwartz said third-quarter federal obligations to ServiceNow looked weak, which counts as a negative read-through. Slower seat growth after earlier purchases got rationalized, plus a spending climate that stays careful, probably explains it. As of Oct. 12, Schwartz calculates, federal obligations stood at $424 million, 16% below a year earlier.
That level also trails the same period in 2024 and 2023. Against normal third-quarter patterns, the year-over-year growth rate trails the three-year average by 13 points and the five-year average by 34 points, the analyst said.
Oppenheimer Sees Favorable Q3 CRPO
Schwartz described the CRPO picture as mixed. ServiceNow started giving CRPO guidance in 2021 and has topped it by an average of 2%, or $173 million, across the past four quarters. Over three years, the typical beat has been 2% or $193 million in the third quarter, and 1% or $92 million in the fourth.
The third quarter looks like the easier of the two final quarters of the year. The Street’s CRPO number assumes a $362 million quarter-over-quarter gain. That is $51 million under the usual seasonal gain, and the estimate also sits $194 million shy of what an average seasonal beat would deliver. Management has a long history of beating its own guidance.
Schwartz expects ServiceNow to clear the consensus bar, but not by a wide margin, since the likely beat is smaller than last quarter’s 2% and the 3% number posted a year earlier.
Q4 CRPO Guidance Faces Headwinds
The fourth quarter looks harder. On the fourth-quarter guide, Schwartz sees limited room to top Wall Street. Weaker federal activity, a harder comparison with last year, demand headwinds and management’s cautious style all hold it back. Schwartz also pointed to a shift in AI budgeting.
Return on investment now drives scrutiny after a period of broad testing, so each extra dollar faces a higher bar, and growth could cool compared with earlier adoption cycles. Schwartz also expects less fourth-quarter IT spending than normal because companies front-loaded budgets into the first half of 2026 for AI trials.
The analyst expects ServiceNow to guide fourth-quarter CRPO in line with, or a bit above, the $15.3 billion consensus. That consensus reflects 19% growth from last year.
NOW Shares Are Rising
NOW Price Action: ServiceNow shares were up 1.05% at $141.80 at the time of publication on Tuesday, according to Benzinga Pro.
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