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Updated thoughts on Xero (XRO) please

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    Updated thoughts on Xero (XRO) please

    Hi James and Team Your latest comment on XRO was "the ALU euphoria looks capable of taking XRO well into $130-$140 target area - long and bullish XRO" Do you view the market is assuming XRO can replicate its Australian growth into the US market. If so are you concerned about its US competitor Quick Books who have a dominant 80 to 85% market position which will be difficult to overcome. Has the market become too optimistic of their drive into the US market. How much is the growth into the US priced in to XRO's current price? Could this be a headwind or catalyst to disappoint. When do you expect an update from XRO. regards

    Answer

    Hi,

    Cloud accounting business XRO is a March year end, so they report FY24 numbers in May. More importantly, they are holding an investor day on the 29th of this month where they’ll put more meat on the bones of their tweaked strategy as they balance out profitability with growth. If interested, you can watch the Investor Day Here

    You are right, the US has been tough for them, and we thought they may scale back there more than they have, instead they are being more selective in the areas they target to avoid fighting QuickBooks on all fronts.

    • We can still see XRO trading above its 2023 ~$128 high in the coming weeks/ months, where we will consider lightning our holding in our Active Growth Portfolio.

    NB We also mentioned XRO in our Friday “What Matters Today Report” in regards to its evolution with AI.

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    Xero Ltd (XRO)
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