The Xero Limited (ASX: XRO) share price is zooming higher on Monday morning.
In early trade, the cloud accounting platform provider’s shares are up 2.5% to $89.78.
Why is the Xero share price rising?
The catalyst for the rise in the Xero share price on Monday has been a rebound in the tech sector.
This follows a very strong night of trade on the Nasdaq index on Friday after investors responded positively to data showing that US inflation is slowing.
It isn’t just Xero that is rising today. For example, the S&P ASX All Technology index is up a solid 2.6% at the time of writing.
Can its shares keep rising?
The good news for investors is that one leading broker believes the Xero share price can keep rising from here.
According to a recent note out of Goldman Sachs, its analysts have put a buy rating and $118.00 price target on the company’s shares.
Based on the current Xero share price, this implies potential upside of 31% for investors over the next 12 months.
What did the broker say?
Goldman believes that the company’s shares are trading at an attractive level currently. In fact, the broker highlights that its shares are changing hands on some of the lowest revenue multiples in years.
It explained: “Given peer de-rating on higher rates, we reduce our target multiple to 15.7X (from 17.5X), driving our 12m TP -11% to A$118. With +53% [now 31%] upside potential, we stay Buy, noting: (1) Our 15.7X target multiples compares to Jan-20 at 16X; and (2) Current trading multiple at 10.1X is its lowest level since Mar-18.”
And while these revenue multiples are still higher than average, Goldman believes this premium is deserved. Particularly given its belief that Xero potentially has a multi-decade runway of solid growth.
The post Xero share price charges higher: Can this tech share keep rising? appeared first on The Motley Fool Australia.
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More reading
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- Analysts name 2 ASX 200 shares to buy after the selloff
- What’s happening with ASX 200 tech shares today?
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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. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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