We're Lifting Price Targets for Three Holdings to Reflect the Latest Data

In Thursday's Daily Rundown video, we alluded that we have been contemplating making some price-target adjustments to reflect recent data. We are following up on that, lifting our price targets for ServiceNow NOW, Mastercard MA and the First Trust Nasdaq Cybersecurity ETF CIBR.

ServiceNow

We are lifting our price target on NOW shares to $1,000 from $900, following more data points showing AI adoption in the enterprise accelerating. According to research from Capgemini, 80% of organizations have increased their investment in generative AI since 2023 and 24% of organizations have integrated generative AI into some or most of their locations or functions.

Capgemini’s research also found that a wider array of companies are adopting AI, which plays into the diversified end market strength of ServiceNow as does the pricing lift brought on by AI solutions ServiceNow has discussed multiple times this year.

While others have already boosted their NOW targets, we are doing this ahead of not only ServiceNow’s October 23 reporting date, but also before the company participates in a Tier I Partner interview on October 16 hosted by Oppenheimer. While we don’t want to be overly presumptive, the odds of ServiceNow appearing during what is normally the quiet period leading up to its quarterly earnings suggest the risks of a disappointing earnings report and guidance are low.

We would also note these trends in AI adoption are also positive for Microsoft MSFT. We would also share we are examining one or two other AI-related software and services companies with an eye toward either the Portfolio or the Bullpen.

Mastercard

We are lifting our MA price target to $535 from $490 following last week’s stronger-than-expected September Employment Report that showed more jobs and higher-than-expected wages, but also positive job revisions for July and August. In addition, other data published by the Bureau of Labor Statistics shows data published from an acceleration in real average hourly as well as weekly year-over-year earnings in August and September compared to prior months.

More people working and earning more money suggests consumer spending could be stronger than expected. Mixing in comments from retailers and other consumer-facing companies, we suspect that even though consumer spending may be better than previously thought, consumers will continue to be selective. MA shares give us a nice arms merchant way of participating even as Mastercard’s business continues to benefit from the global shift to card and mobile payments from cash and checks.

Others across Wall Street, including Barclays and Oppenheimer, have slapped even higher price targets on MA shares. While we may be more conservative in our spending assumptions, as more data is had should it show we are being overly conservative, we’ll boost our MA price target as needed.

FirstTrust Nasdaq Cybersecurity ETF

You’ve likely noticed that, when we share a fresh batch of ripped-from-the-headlines signals with you, there are always several discussing recent cyberattacks. It seems we haven’t been the only ones because, as you can see below, in its latest forecast research firm Gartner sees the pace of cybersecurity spending accelerating this year and again in 2025.

One of the reasons we’ve opted to invest in cybersecurity through the CIBR ETF is the well-rounded coverage it provides across the cybersecurity spectrum. With spending poised to accelerate, we’re boosting our CIBR price target to $68.

Even though we are making this move, we would caution members to sit on the sidelines with CIBR shares because they are on the cusp of becoming overbought. A better price point for newer members would be below $59 and more aggressively between $56 and $58.

Worldwide end-user spending on information security is projected to total $212 billion in 2025, an increase of 15.1% from 2024, according to a new forecast from Gartner, Inc. In 2024, global information security end-user spending is estimated to reach $183.9 billion.

The security software segment, which includes endpoint protection platforms, captures the majority of information security spending globally. Gartner forecasts spending on security software will increase by 15% to nearly $101 billion in 2025.

The research firm’s forecast for 2025 includes a 15.6% jump in security services spending, which is expected to exceed $86 billion, and a 13% increase in network security spending to almost $25 billion. Security services include consulting and professional and managed security services.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long NOW, MA and CIBR.