The first full week of April trading hasn't been kind to ServiceNow (NOW +1.58%). Closing at $102.42 on Monday, shares of the software-as-a-service (SaaS) stock subsequently closed lower on each day of trading through Thursday. And the trend seems likely to continue today. A firm tempered its expectations for ServiceNow stock, and investors are responding by trimming their positions.
As of 2:55 p.m. ET, shares of ServiceNow stock are down 7.1%.
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Winnowing confidence in the company leads to a sharply lowered price target
UBS is no longer as bullish on ServiceNow's prospects as it was a couple of days ago. Last night, UBS downgraded ServiceNow stock to neutral from buy and slashed its price target to $100 from $170. Based on shares closing at $89.81 yesterday, the new UBS price target implies upside of 11%.
NYSE: NOW
Key Data Points
According to Thefly.com, UBS lowered its expectations for ServiceNow stock because it's less sure the company is in a more advantageous position to benefit from the AI computing boom than its software peers. Moreover, UBS doesn't foresee the company surpassing analysts' expectations in the upcoming quarters as convincingly as it had done in the past.
Should ServiceNow investors be running for the exits now?
While it may be disconcerting for investors to find that UBS reduced its expectations for ServiceNow stock, they must keep their emotions in check. The opinions of UBS are, well, exactly that -- opinions, not facts.
Investors would be wise to remember that, in 2026, ServiceNow projects subscription revenue growth of more than 20% year over year. Plus, the company, one of the leading SaaS stocks available to investors, forecasts a 2026 free cash flow margin of 36% -- an improvement over the 31.5% and 35% margins it reported in 2024 and 2025, respectively. For those with ServiceNow stock in their portfolios, the best approach now is to remain calm and continue monitoring the company's financial results for any warning flags.
