Key Takeaways
- BNP Paribas maintains Outperform rating on ServiceNow with $140 price target, viewing setup as favorable ahead of Q2
- Analyst Stefan Slowinski identifies IBM-driven market decline as a purchase opportunity for NOW shares
- Full-year 2026 forecast calling for 20.5%-21% subscription revenue expansion may be understated, BNP suggests
- RBC Capital increases NOW price objective to $130 from $121, keeping Outperform stance
- Recent industry surveys show positive momentum, with NOW reclaiming top position in BNP’s reseller analysis
As ServiceNow (NOW) approaches its second-quarter financial disclosure, a pair of prominent Wall Street analysts have expressed confidence in the enterprise software company, despite recent volatility sparked by IBM’s disappointing outlook.
Stefan Slowinski, who covers the stock for BNP Paribas, characterized the IBM-related market decline as “an opportunity” for investors, highlighting NOW’s expanding cybersecurity offerings and more favorable federal government comparisons expected in the latter half of 2026.
Slowinski maintains his Outperform recommendation with a $140 price objective. His analysis suggests that ServiceNow’s fiscal 2026 guidance projecting 20.5% to 21% subscription revenue expansion in constant currency terms may prove overly cautious.
According to his research, this conservative posture partly reflects NOW’s first-quarter slippage in on-premises transactions. Management has indicated these delayed agreements should finalize within the current fiscal year.
Regarding second-quarter expectations, ServiceNow has projected subscription revenue growth between 21% and 21.5% on a constant currency basis, with mergers and acquisitions adding approximately 225 basis points additionally.
Acquisition Impact May Exceed Expectations
Slowinski noted that the anticipated contribution from the Armis acquisition might be conservative, potentially enabling NOW to surpass its headline revenue projections.
He anticipates the company may tighten its annual outlook toward the upper boundary of its existing range and project 21% subscription revenue growth in constant currency for the complete fiscal year.
For net-new annual contract value metrics, Slowinski forecasts year-over-year acceleration during the second half of 2026, driving organic subscription revenue expansion to approximately 19% by year’s end, compared with roughly 18% recorded in Q1.
Government Sector Poised for Recovery
A critical element of BNP’s investment case centers on NOW’s upcoming easier comparisons following DOGE-related headwinds and government shutdown disruptions that impacted performance from Q2 through Q4 of 2025.
This dynamic suggests the US federal business segment, which served as a headwind previously, may transform into a growth catalyst as comparisons ease throughout the remainder of this year.
Industry channel feedback has also trended positively for NOW. Slowinski observed the company reclaimed the leading position in BNP’s reseller survey after dropping in the previous quarter.
RBC Capital similarly increased its NOW price target before the earnings announcement, lifting it to $130 from $121 while maintaining an Outperform rating.
RBC referenced its own favorable industry checks and a recent Bay Area technology tour that strengthened the firm’s outlook for selected software companies, particularly cybersecurity consolidators and infrastructure providers.
The firm identified one monitoring factor: CIO and CTO expenditure patterns continue showing variability due to what it termed “Mythos urgency.” RBC noted that IBM’s disappointing pre-announcement creates questions about wider deal cycles and spending priorities entering Q2 software earnings season.
RBC elevated its ServiceNow price target to $130 from $121 on July 16, preserving its Outperform rating as part of an extensive Q2 software sector assessment.
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