Xero falls to 10-month low

Rod Drury
Xero 12-month price history (NZX.com)

Xero [NZX: XRO] shares were down 6.05% in late trading to $20.20 — a 10-month low.

Across the Tasman, Macquarie initiated coverage with an "under-perform" rating, picking up the familiar analyst theme that Xero is a strong, growing operation whose valuation is running head of the pace (or "beautiful company, expensive stock" as Macquarie's note is sub-titled).

“We expect Xero to gain significant market share of the small business accounting software market. They have a compelling product and have gained a good market share in the countries they entered first. However, the current share price is factoring in too much upside,” Macquarie analyst Daniel Frost says in an AFR article called "Share sag puts shadow over Xero’s global foray."

The article also references another common analyst theme: Xero's challenge in the key US market, where it faces incumbent Intuit.

Aside from the negative press across the Tasman, there has been no major Xero news, and today's fall has been on thin volume.

Asked by NBR for comment on today's share price movement, CEO Rod Drury preferred to look forward, saying, "As we covered in our Annual Meeting Xero crossing $100 million in annualised revenue at an 80% growth rate. That puts us with the top SaaS [software as a service] players in the world and the business is going very well.

"Looking forward to showing some of innovations we've been working on at #Xerocon Australia next week. At over 1300 registrations we believe we've become Australia's largest tech vendor conference and New Zealanders should be very proud of that."

What do you think? Has Xero's recent fall created a buying opportunity? Click here to vote in our subscriber-only business pulse poll.

This article is tagged with the following keywords. Find out more about My Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7740 -0.0003 -0.04%
AUD 0.9511 0.0005 0.05%
EUR 0.6324 -0.0002 -0.03%
GBP 0.4954 0.0001 0.02%
HKD 6.0039 0.0001 0.00%
JPY 92.5100 -0.0050 -0.01%

Commods

Commodity Price Change Time
Gold Index 1195.4 -2.890 2014-12-19T00:
Oil Brent 61.4 1.580 2014-12-19T00:
Oil Nymex 57.1 2.910 2014-12-19T00:
Silver Index 16.0 0.096 2014-12-19T00:

Indices

Symbol Open High Last %
NZX 50 5518.5 5545.0 5539.3 -0.21%
NASDAQ 4752.6 4782.1 4748.4 0.36%
DAX 9901.3 9901.3 9811.1 -0.25%
DJI 17778.0 17874.0 17778.2 0.15%
FTSE 6466.0 6566.9 6466.0 1.23%
HKSE 23158.3 23189.6 22832.2 1.25%
NI225 17511.0 17621.4 17210.0 2.39%