Broker: iFAST Financial Pte Ltd
Date of Report: 16 July 2026
Excerpt from iFAST report.
Report Summary
Stock Focus: ServiceNow Inc. (NYSE: NOW)
Action: Initiate with BUY rating
Target Price: USD 144.70
Current Price (as of report): USD 104.85
Upside Potential: 38%
Key Investment Thesis:
- Sticky Workflow Ecosystem: ServiceNow’s platform is deeply embedded in enterprise operations across IT, HR, customer service, security, and data workflows. The company boasts a 98% renewal rate and expanding multi-product adoption, creating high switching costs and durable revenue streams.
- AI Monetisation: ServiceNow is layering AI-driven monetisation on top of its subscription model with premium tiers, service credits, and usage-based pricing. Products like Now Assist are seeing rapid commercial uptake, with annual contract value (ACV) targets of USD 1.5Bn for FY2026 and a projected USD 9Bn by FY2030.
- AI Control Tower & Strategic Acquisitions: Recent acquisitions (Moveworks, Veza, Armis) strengthen ServiceNow’s ability to govern and secure AI-driven workflows, addressing enterprise needs for governance, identity, and security. This expands the total addressable market and positions ServiceNow as a critical workflow execution and governance layer in the AI era.
- Financial Highlights: FY2025 revenue reached USD 13.3Bn (+20.9% y/y) with a 97% subscription mix, a 98% renewal rate, and USD 4.64Bn in free cash flow (35% margin). Management guides for continued 20%+ subscription revenue growth, high margins, and robust cash generation.
- Valuation: ServiceNow is valued at a premium relative to peers due to its growth quality and cash flow profile, but still trades below its historical average multiple. The report sets a fair P/E of 24x on FY2028E EPS of USD 6.08, supporting the target price and upside.
Risks:
- AI agents could reduce demand for human user seats, impacting traditional seat-based revenue. The company is actively transitioning to hybrid pricing to offset this risk.
- Higher AI adoption could pressure gross margins if monetisation lags increased compute costs.
- Slower enterprise spending or weaker contract growth could challenge the growth outlook and valuation.
Conclusion: iFAST recommends a BUY on ServiceNow, citing its defensible workflow platform, early AI monetisation, and strong financials. The recent share sell-off is seen as an attractive entry point for long-term investors seeking exposure to AI-driven enterprise software.
Above is an excerpt from a report by iFAST Financial Pte Ltd. Clients of iFAST Financial Pte Ltd can access the full research report from the broker’s website.
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