ServiceNow (NOW, Financials), the enterprise software company known for workflow automation, heads into its second-quarter report with a favorable setup, according to BNP Paribas.
Analyst Stefan Slowinski said the recent selloff in software stocks created a better entry point, especially as ServiceNow builds out its cybersecurity business.
BNP believes the company's current guidance may leave room for an upside surprise. ServiceNow expects constant-currency subscription revenue growth of 21% to 21.5% for the quarter, with acquisitions adding about 2.25 percentage points.
The firm also expects net-new annual contract value to improve later this year. That could help organic subscription growth finish 2026 near 19%, up from about 18% in the first quarter.
Federal business may also become less of a drag as ServiceNow moves past difficult comparisons tied to last year's government spending disruptions.
Recent reseller checks were encouraging, with ServiceNow returning near the top of BNP's survey after a softer showing last quarter.
The next test comes with quarterly results, when investors will look for stronger bookings, improving federal demand and any increase to full-year guidance.