Xero earnings per share forecast to surge 180% in FY24: Morgans

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share priceA cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price

The Xero Limited (ASX: XRO) share price descended 39% in the last year, but could it bounce back in the future?

Xero shares fell 2.27% today to close at $72.62. For perspective, the S&P/ASX 200 Index (ASX: XJO) fell 0.03% today.

Let’s take a look at the outlook for the Xero share price.

What’s ahead in the future?

Xero is a global cloud technology company with a presence in Australia, the United States, New Zealand and the United Kingdom.

Analysts at Morgans tip Xero’s earnings per share to explode 185% from 10.6 cents per share in FY23 to 30.2 cents per share in FY24.

Investment adviser Jabin Hallihan, commenting on The Bull, said:

Selective exposure to technology stocks is likely to deliver value due to their ability to grow earnings faster than GDP, regardless of interest rate movements. 

We prefer high quality technology companies with net cash balance sheets and pricing power.

Xero reported a $9.2 million increase in free cash flow in the half year ended 30 September 2022. The company had $1.1 billion in total available liquid resources at this time.

Morgans is recommending shareholders buy Xero. The broker has placed a $77 price target on the company’s share price. This implies a 6% upside based on the current share price.

Meanwhile, Goldman Sachs is also recommending investors buy the Xero share price. Goldman sees Xero as a “compelling global growth story”. Analysts said:

We see Xero as very well placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$76bn TAM.

Following the recent underperformance (absolute/relative), we see an attractive entry point into a compelling global growth story and our preferred large-cap technology name in ANZ, and are buy rated.

Xero share price snapshot

The Xero share price has climbed more than 3% in the year to date but has fallen 1% in the last month.

For perspective, the benchmark ASX 200 index has slid 0.42% in the last year.

Xero has a market capitalisation of about $10.9 billion based on the current share price.

The post Xero earnings per share forecast to surge 180% in FY24: Morgans appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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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