Xero Ltd (ASX: XRO) shares are taking a tumble today.
Shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider closed up 2.6% yesterday trading for $96.10. During the Wednesday lunch hour, shares are changing hands for $83.59 apiece, down 13%.
For some context, the ASX 200 is just about flat at this same time.
However, ASX tech stocks are broadly under pressure today, with the S&P/ASX All Technology Index (ASX: XTX) down 6.2%. That looks to be partly driven by weakness in US tech stocks on Tuesday, with the Nasdaq Composite Index (NASDAQ: .IXIC) closing down 1.4% overnight.
With today’s intraday losses factored in, Xero shares are down a sharp 54% over the past 12 months.
But with the ASX 200 tech stock now having lost more than half its value over a year, Morgans’ Damien Nguyen views it as an attractive opportunity (courtesy of The Bull).
Here’s why.
Xero shares on the growth path
“Xero is a global accounting software provider,” Nguyen noted late last week. “It offers an attractive medium term growth opportunity as subscriber momentum improves and operating leverage begins to flow through the business model.”
Commenting on his buy recommendation on Xero shares, he said:
The business continues to expand its footprint across key geographies, with cloud accounting penetration still well below potential, providing a long runway for adoption. Recent cost discipline has strengthened margins.
With the ASX 200 tech stock having gotten hammered over the past year, Nguyen concluded:
Despite a softer macroeconomic backdrop, resilient revenue growth is supported by price increases and a broader ecosystem of adjacent services. We view the current share price as an attractive entry point for long term investors.
What’s the latest from the ASX 200 tech stock?
Yesterday, Xero released an announcement highlighting the potential benefits of its AI features along with the growth opportunities in the United States.
Xero shares closed the day in the green after the company reported that more than four million global customers are now using its platform. And the company said that some two million Xero subscribers are benefitting from its AI features.
“We are deeply focused on capturing the global AI and US accounting plus payments TAM,” Xero CEO Sukhinder Singh Cassidy said. “Xero is well positioned to shepherd SMBs into the AI era and take advantage of this technology.”
The company also reaffirmed that it remains on track to meet its full-year FY 2026 guidance.
The post Why Xero shares are now back in the buy zone appeared first on The Motley Fool Australia.
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Motley Fool contributor Bernd Struben 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.