The Santa Clara, Calif., company's stock price dropped 6.29% to $256.99.
Analyst Keith Weiss said upside to Morgan Stanley's price target of $267 a share was "limited," even after a 10% pullback since July following a 60% runup, Bloomberg reported.
The report cited "increasing near-term risks" to the stock price of the maker of IT-management software with an emphasis on digital workflow tools for employees.
A potential drag on margins is ServiceNow's ramped-up spending on research and development, Morgan Stanley noted. The firm added that the software company remains a "a best-in-class software asset."