ServiceNow’s Pro Plus SKU Drives Significant Revenue Growth and Justifies Buy Rating

In a report released yesterday, Peter Weed from Bernstein maintained a Buy rating on ServiceNow (NOW – Research Report), with a price target of $1,003.00.

Peter Weed’s rating is based on a combination of factors, including the anticipated growth from ServiceNow’s new Pro Plus SKU, which is expected to provide significant revenue tailwinds through 2027. The analysis indicates that the adoption rate of the Pro Plus SKU is currently ahead of previous products, with customer penetration at 55% as of the latest analyst day.
Furthermore, the revenue generated from the Pro Plus SKU appears to be mostly incremental, rather than simply reallocating existing budgets. This is supported by the company’s ability to sustain a 30%+ realized price lift. The projected growth of the Pro Plus SKU from $200 million in Q4 2024 to $650 million by the end of 2025, and further incremental growth in subsequent years, aligns with the company’s expectations and underpins the Buy rating.

In another report released on May 20, Oppenheimer also reiterated a Buy rating on the stock with a $1,100.00 price target.

Based on the recent corporate insider activity of 176 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of NOW in relation to earlier this year.