2 ‘Resilient’ Software Stocks That Wall Street Thinks You Should Buy Now

Core Viewpoint - BNP Paribas Exane has cut the price target for ServiceNow to $120 from $186, indicating a moderate downside, while maintaining a "Neutral" rating despite describing the company as "resilient" [1] Company Overview - ServiceNow is a leading provider of cloud-based digital workflow solutions, operating the ServiceNow AI Platform that integrates with various cloud models and data sources [2] - The company serves over 85% of the Fortune 500 and nearly 60% of the Global 2000, with a market capitalization of $138.1 billion [2] Financial Performance - ServiceNow reported third-quarter total revenue of $3.41 billion, a 21.8% year-over-year increase, surpassing Wall Street expectations by $50 million [6] - Subscription revenue accounted for $3.3 billion, reflecting a 21.5% increase from the previous year, driven by new and existing customer purchases [6] - The company's current remaining performance obligations (cRPO) reached $11.35 billion, representing a 21% year-over-year growth [7] - ServiceNow raised its full-year guidance for subscription revenue to $12.84 billion to $12.85 billion, up from a previous forecast of $12.78 billion to $12.8 billion [8] Market Sentiment and Analyst Ratings - Despite concerns about AI disruption, many analysts maintain a positive outlook on ServiceNow, with 33 out of 42 analysts recommending a "Strong Buy" [11] - The average price target for ServiceNow stock is $212.88, suggesting a 59.9% upside potential from its recent closing price [11] Upcoming Expectations - Analysts expect ServiceNow's Q4 results to show a 23.08% year-over-year increase in GAAP EPS to $0.48 and a 19.35% year-over-year revenue increase to $3.53 billion [9] - The recent decline in ServiceNow shares has made its valuation more attractive, with a forward non-GAAP P/E of 38.25x, significantly lower than its five-year average of 67.56x [10]