Up 53% in 12 months: Can the Xero (ASX:XRO) share price go even higher?

Can this high-flying share soar even higher?
The post Up 53% in 12 months: Can the Xero (ASX:XRO) share price go even higher? appeared first on The Motley Fool Australia. –

The Xero Limited (ASX: XRO) share price has been a strong performer over the last 12 months.

Since this time last year, the cloud-based business and accounting platform provider’s shares are up 53%.

Why has the Xero share price been on fire over the last 12 months?

The strong gain by the Xero share price over the last 12 months has been driven largely by the company’s impressive performance during FY 2021.

For the 12 months ended 31 March, Xero reported an 18% increase in revenue to NZ$848.8 million. This was driven largely by its Australian, UK, and Rest of the World operations, which all reported strong revenue growth year on year.

This strong top line growth was underpinned by a 20% increase in subscribers to 2.74 million. This reflects a 20% increase in ANZ subscribers to 1.56 million and a 21% increase in International subscribers to 1.18 million.

And thanks to the achievement of further operating leverage, Xero reported a 39% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$191.2 million.

Can its shares go higher?

One broker that believes the Xero share price may now have peaked for the time being is Citi.

According to a recent note, its analysts have retained their neutral rating and $135.70 price target on its shares. This compares unfavourably to the current Xero share price of $136.94.

While the broker is a fan of Xero and believes demand for its platform is increasing, it appears to believe its valuation is getting stretched.

Citi commented: “We see the demand backdrop for Xero as positive driven by improving SMB trends as economies open up, strength in business formation boosting new customer acquisition and low insolvencies/bankruptcies keeping churn in check. Further, FY22e revenue growth should benefit from the PlanDay acquisition (3% impact). However, with the stock trading on 19x FY22e revenue, we do not see the risk-reward as compelling and maintain our Neutral rating.”

The post Up 53% in 12 months: Can the Xero (ASX:XRO) share price go even higher? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Xero right now?

Before you consider Xero, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Xero wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

2 excellent ASX 200 blue chip shares to consider

CBA (ASX:CBA) partners with Xero’s Waddle for new financing product
2 ASX growth shares this leading broker loves

5 things to watch on the ASX 200 on Tuesday

ASX 200 Weekly Wrap: ASX makes it 5 out of 5

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!