Morgans initiates coverage on cloud-based accounting software platform Xero with an Add rating and target price of $90.25.
The broker believes additional subscribers and average revenue per user (ARPU) growth (via product expansion) should create substantial barriers to entry/network effects.
Significant runway for customer growth is anticipated with less than 10% penetration of an over 45m (small-to medium sized business) total addressable market (TAM).
Sector: Software & Services.
Target price is $90.25.Current Price is $76.96. Difference: $13.29 – (brackets indicate current price is over target). If XRO meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).
