ServiceNow (NOW): Evaluating Valuation as New Platform Partnerships Expand Automation and Workplace Intelligence

ServiceNow (NOW) recently rolled out new collaborations with Figma and VergeSense, further evolving its platform for enterprise customers. These moves support faster application development and smarter workplace management, aligning with ServiceNow’s strategy to meet changing automation and design needs.

See our latest analysis for ServiceNow.

Following these platform moves and a recent proposed 5-for-1 stock split, ServiceNow's share price has swung lower in 2024, with an 18.05% year-to-date decline. Still, long-term momentum remains strong, as the stock has delivered a 109.62% total return over three years. This signals the company’s growth track record is far from over, even if sentiment has cooled this year.

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With strong recent innovations and shares trading at a notable discount to analyst price targets, the question for investors is clear: Is ServiceNow currently undervalued, or is the market already pricing in its next phase of growth?

Most Popular Narrative: 25.3% Undervalued

According to the most followed narrative, ServiceNow's fair value is estimated to be about $1,157 per share. This is significantly above the recent close of $864.04, which suggests notable upside, based on robust long-term growth expectations and strategic execution.

ServiceNow's focus on AI platform and business transformation is gaining momentum. This is expected to drive future revenue growth as demand for AI-driven solutions increases. The acquisition of companies like Moveworks and Logik.ai can enhance ServiceNow’s offerings by driving efficiencies and offering more integrated solutions, which may also improve net margins.

Read the complete narrative.

Curious about the bullish logic that puts ServiceNow’s value so far above its share price? The narrative reveals ambitious targets for both future growth and profitability. Want to see the full set of projections and assumptions supporting this high valuation? Dive in to unlock the financial roadmap behind ServiceNow’s potential re-rating.

Result: Fair Value of $1,156.59 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, challenges such as reliance on U.S. federal contracts and global economic uncertainty could impact ServiceNow’s growth path and shift investor sentiment.

Find out about the key risks to this ServiceNow narrative.

Another View: Market Multiples Signal Caution

While the fair value narrative suggests significant upside, a look at ServiceNow's price-to-earnings ratio tells a more cautious story. The company trades at 103.6 times earnings, much higher than both the industry average (32.1x) and its peer group (57.9x), and also above a fair ratio of 49.8x. This signals investors may be paying a premium for expected growth and innovation, posing real valuation risk if expectations aren’t met. Could the market be overreaching, or does it simply see more in ServiceNow’s story than the multiples suggest?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own ServiceNow Narrative

If you see ServiceNow's story differently or want to chart your own path, you can build your personal view in just minutes. Do it your way

A great starting point for your ServiceNow research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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