Key Takeaways
- BNP Paribas maintains an Outperform rating on ServiceNow with a $140 price target, viewing the setup as “constructive” before Q2
- BNP’s Stefan Slowinski views the IBM-related market decline as a strategic entry point for NOW investors
- The company’s FY26 forecast calling for 20.5%-21% subscription revenue expansion may prove overly cautious, according to BNP
- RBC Capital elevated its NOW price target from $121 to $130 while keeping its Outperform stance
- Recent reseller surveys and channel feedback indicate strengthening momentum for NOW, with the company reclaiming top position in BNP’s polling
As ServiceNow (NOW) prepares to report its second-quarter financial results, two prominent Wall Street research shops are expressing confidence in the enterprise software giant, despite market turbulence sparked by IBM’s disappointing outlook.
Stefan Slowinski, an analyst at BNP Paribas, characterized the recent weakness following IBM’s warning as “an opportunity” for investors, highlighting ServiceNow’s expanding cybersecurity offerings and more favorable federal government comparisons expected in the latter half of 2026.
With an Outperform rating and $140 price objective, Slowinski contends that ServiceNow‘s fiscal 2026 guidance projecting 20.5% to 21% constant currency subscription revenue growth appears deliberately cautious.
According to Slowinski’s assessment, this conservative posture partially reflects the on-premises deal delays experienced during the first quarter. Management has indicated expectations that these postponed transactions will finalize within the current fiscal year.
For the second quarter specifically, ServiceNow has projected subscription revenue expansion of 21% to 21.5% on a constant currency basis, with approximately 225 basis points of additional contribution from recent acquisitions.
Acquisition Impact May Exceed Guidance
Slowinski highlighted that the anticipated contribution from the Armis acquisition embedded in guidance may be too conservative, potentially creating upside for the company’s reported revenue figures.
His expectation is that management will tighten its full-year outlook toward the upper boundary of its existing range and guide to 21% constant currency subscription revenue growth for fiscal 2026.
Regarding net-new annual contract value metrics, Slowinski anticipates year-over-year acceleration during the second half of 2026, potentially driving organic subscription revenue growth to approximately 19% by year-end, compared to roughly 18% recorded in the first quarter.
Government Sector Could Provide Boost
A central element of BNP’s investment thesis centers on ServiceNow cycling past the DOGE-related disruptions and government shutdown effects that pressured performance from the second through fourth quarters of 2025.
This dynamic suggests the US federal segment, which represented a headwind throughout last year, may transition into a positive catalyst as year-over-year comparisons ease during the remainder of 2026.
Channel intelligence also paints an encouraging picture for NOW. Slowinski observed that the company has regained the leading position in BNP’s reseller survey following a brief slip in the previous quarter.
RBC Capital similarly increased its price target on NOW before the earnings release, adjusting it upward to $130 from $121 while maintaining an Outperform rating.
RBC pointed to its own favorable channel checks and insights from a recent Bay Area technology bus tour that left the firm increasingly optimistic about select software companies, particularly cybersecurity consolidators and infrastructure-focused players.
The firm did identify one area warranting attention: CIO and CTO spending behaviors remain in flux due to what RBC termed “Mythos urgency.” The firm also noted that IBM’s cautionary pre-announcement raises broader questions about deal completion timelines and budget allocation priorities as the second-quarter software earnings season unfolds.
RBC Capital lifted its ServiceNow price target to $130 from $121 on July 16, reaffirming its Outperform rating as part of a comprehensive second-quarter software sector analysis.
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