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ServiceNow heads into its October 28 earnings report with an unusual split: the analyst community is lifting targets in bulk while short sellers quietly rebuild positions.
Short interest has risen 7.4% over the past week to 14.2% of the free float, reversing the retreat that dominated September. That is a meaningful acceleration. The move started around October 8, when shares jumped on short covering, and has since unwound much of that progress. The ORTEX short score has drifted up to 31.5, the highest reading in the current series, though still well inside moderate territory. Borrowing remains easy: the cost to borrow is just 0.44%, and availability is extraordinarily loose at 8,764%, meaning there are roughly 88 shares available to lend for every one currently borrowed. The lending market offers no friction whatsoever to anyone wanting to add to a short position ahead of earnings, which partly explains why they are.
Options traders are not sending a dramatically different signal. The put/call ratio is 0.91, sitting almost exactly in line with its 20-day average of 0.905 and well within one standard deviation of normal. At its 52-week extremes the ratio has been as high as 1.17 and as low as 0.60, so the current reading suggests options positioning is broadly neutral rather than defensive. For context, peers are split: PD is up 8% on the week and CRM is up 5.8%, while ADBE has dipped 0.8%. The software tape is broadly positive, making NOW's short rebuild more stock-specific than macro.
The Street's behaviour over the past week sharpens this contrast. Multiple analysts have raised targets for the second time in under two months, with moves large enough to suggest the prior round of upgrades was too conservative. Wells Fargo lifted to $190 from $175, keeping Overweight. Evercore ISI raised to $175 from $160. Barclays moved to $160 from $134. RBC Capital went to $176 from $130. Citigroup's Tyler Radke, filing today, pushed to $170 from $154 while keeping his Buy. The consensus mean target is now $150.28, about 8.4% above the current price of $138.61. Two weeks ago, when the previous note was published, that same target sat at $146.73 with the stock at $137.97, so the gap has widened again as analysts ran ahead of the tape. The only notable hold is UBS at Neutral, though even that desk raised its target to $150 from $110 last week.
The bull case rests on FY25 NNACV of $2.33 billion, up 9% year-on-year, and an expected acceleration toward 17%-plus organic subscription revenue growth by FY27, with AI workloads increasingly cited as a driver. The bear case is harder to dismiss: the company logged what analysts described as the largest sequential decline in contracted remaining performance obligations in its history last quarter, and Federal Government revenue fell 49% sequentially and 72% year-on-year. Open positions fell 35% within the quarter. That is the data shorts are betting on. The valuation offers limited cushion either way: PE stands at 28.8x and EV/EBITDA at 18.9x, both compressed from their 30-day peaks, though the EV/EBIT factor score ranks in just the 10th percentile of the ORTEX universe, flagging the stock as expensive on operating earnings.
The last earnings print, on July 22, saw NOW fall nearly 10% on the day before recovering to gain 13% over the following five sessions. That pattern, an initial flush followed by a recovery, is the dynamic both bulls and shorts will be gaming on October 28. With short interest rebuilding into the event, availability offering no impediment to further adds, and analysts already priced for a strong print, the gap between where shorts and the sell-side are positioned makes the quality of the guidance, particularly any commentary on federal business and CRPO trajectory, the number that will decide who is right.
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