Goldman Cuts ServiceNow Target 10% to $550 on Growth Slowdown Warning
Goldman Sachs downgraded ServiceNow to Neutral and cut its 12-month price target by 10% to $550, warning that subscription revenue growth could slow to 18% in fiscal 2026. The firm flagged elevated renewal risk from enterprises delaying digital-transformation spend and noted stretched valuation at 25x forward EBITDA.
1. Analyst Downgrade
Goldman Sachs moved ServiceNow from Buy to Neutral and reduced its 12-month price objective by 10% to $550, reflecting concerns that current share valuation no longer offers sufficient upside. The firm highlighted that the stock’s rally over the past year has priced in strong growth, leaving limited room for error.
2. Growth Outlook
Analysts at Goldman project subscription revenue growth decelerating from 22% to 18% in fiscal 2026 as large corporate clients postpone digital-transformation investments. They also noted that emerging competitors are pressure-testing ServiceNow’s market share in key enterprise segments.
3. Valuation and Risks
ServiceNow now trades at roughly 25x forward EBITDA, a premium to peer averages, prompting Goldman to question multiple expansion prospects. Additional risks include elevated renewal churn rates and potential margin compression from increased R&D spending to counter competitive threats.