Xero Ltd (ASX: XRO) shares have had a brutal run. Over the past 12 months, the ASX tech stock has swung between a low of $61.45 and a high of $166.00. At the time of writing, Xero shares sit at $62.78, hovering just above that 52-week low and a full 62% below the year’s record high.

The recent trend hasn’t been kind either. Xero shares finished the week as one of the big losers with a loss of 4% on Friday. The stock is down 9% over the past five trading days, 24% over the past month, and a painful 45% so far in 2026.

And yet, through all of that, brokers remain stubbornly bullish. Here’s why.

Betting bigger than just accounting software

Xero isn’t just trying to sell more accounting subscriptions anymore. The team at Macquarie Group Ltd (ASX: MQG) has flagged US growth and AI monetisation as key catalysts for Xero shares to watch.

The company estimates the US small-business payments market alone represents a US$29 billion opportunity. The acquisition of Melio has dramatically expanded what Xero can chase. The ambition now is bigger than bookkeeping. Xero wants to put accounting, payments, payroll and expenses under a single roof.

It effectively tries to become the financial operating system for millions of US small businesses. Xero says the Melio deal delivered an approximately threefold increase in North American revenue from day one.

It’s also stretching its reach beyond small businesses into self-employed customers and medium-sized businesses too. With Melio, pro forma FY26 US revenue reached NZ$530 million, up 50%, and pro forma gross profit rose 36% to NZ$186 million.

Melio supplies the payments engine, Xero adds payroll and other financial tools, and a new US leadership structure is being built specifically to accelerate customer acquisition and integrate the two businesses.

Enter Artificial Intelligence

Layer artificial intelligence on top, and the strategy gets considerably more interesting. Xero is developing JAX, its agentic AI platform, aiming to move beyond simply reporting financial information toward actually automating financial work.

AI-powered analytics are also being embedded across the platform, with the long-term goal of shifting Xero from a system of record into a system of action.

Put it together, and the bull case for Xero shares becomes a simple formula: win more US customers, sell more products to each one, grab a slice of a massive payments market, and use AI to make the whole platform more valuable.

If Xero pulls this off, the upside case stops being about accounting software altogether. It becomes about owning a much bigger slice of the small-business financial stack.

What are brokers saying?

Despite the carnage in the share price, broker’s sentiment hasn’t cracked.

TradingView’s poll of the past three months shows a buy consensus. There are 6 buy or strong buy ratings, just 1 hold, and zero sells on Xero shares. The average 12-month target sits at $111.24. That suggest roughly 76% upside from current levels. The most bullish target implies potential upside of 130%.

Individual calls back that up. Citi has reiterated its buy call with a $113.60 target, implying around 81% upside. Morgan Stanley sees $130, and UBS sits at $127.

Ord Minnett and Morgans are more conservative at $110 and $111, while RBC Capital and Jefferies bring up the cautious end at $85 and $77. Even so, these targets imply upside of 35% and 23%, respectively, from the current share price.

The post Why brokers think Xero shares could surge 130% from here appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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 Macquarie Group and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) has endured a flat year in 2026, and has been outpaced by many international markets. 

Australia’s benchmark index has been weighed down by high interest rates, inflation and fears around global conflict. 

These have hit sectors like finance/banking, which represent a strong portion of the ASX 200. 

Despite the disappointing performance, this has created value opportunities for quality companies. 

One such ASX 200 stock firmly in my sights is SGH Ltd (ASX: SGH). 

Company overview 

SGH is a diversified industrial and investment group, with interests in heavy-equipment sales, service and equipment hire, media and broadcasting, oil and gas, and developable property. 

The ASX 200 company has seen its share price fall more than 20% year to date. 

Despite this, the underlying fundamentals look relatively strong. 

In its full-year results released in August, the company reported a net profit of $689.2 million, up 31.8%, even as revenue slipped 1.4% to $10.59 billion.

Revenue was broadly in line with the prior year. Underlying NPAT of $920 million and underlying EPS of $2.26 were broadly flat. Statutory NPAT of $655 million was up 35%.

SGH MD & CEO Ryan Stokes, said: 

FY26 was a year of disciplined delivery in variable market conditions. We grew earnings in line with guidance, expanded margin again, and converted 99% of EBITDA to cash. That result is a credit to our people across every business, and their commitment to serving our customers and running our operations well every day.

Morgans sees upside for this ASX 200 stock

Recent share price weakness has now pushed this ASX 200 stock firmly into value territory. 

In a recent note from Morgan’s, the broker slightly lowered its price target but maintained a positive long-term view on the company. 

Following the FY26 results season we have reviewed our forecast assumptions for SGH’s 30% share in BPT, flowing through the lower earnings detailed in our FY26 BPT results note (Link). With our sum-of-the-parts (SOTP) valuation tied to our BPT price target and the Crux valuation, an NPV of future cashflows, our SGH valuation declines modestly to $48/sh (previously $50/sh), whilst retaining our BUY recommendation.

Based on this target, Morgans anticipates up to 30% growth for this ASX 200 stock. 

This expectation is consistent with other brokers. 

Based on 12 analyst targets via TradingView, the average 12 month target is $48.71. 

The post Why this ASX 200 stock is a compelling buy with 30% upside appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Codan vs Pro Medicus shares: which growth stock offers better value?

Keen on growth shares but not sure whether Codan Ltd (ASX: CDA) or Pro Medicus Ltd (ASX: PME) is the smarter buy? Both names have built reputations as high-performing Aussie tech businesses, but dig deeper and you’ll quickly notice some big contrasts. Let’s break down what sets Codan and Pro Medicus apart when it comes to value, growth, and recent momentum.

The case for Codan

Codan is a global technology player, best known for high-tech communications, metal detection, and mining solutions. Through segments like Codan Communications, Minelab, Minetec, and Defence Electronics, the company serves government, military, and commercial customers in dozens of countries. According to its company profile, Codan controls its own products end-to-end, with manufacturing plants in Australia and Malaysia, and a sales footprint concentrated in North America.

What stands out for Codan right now is just how quickly it’s compounded shareholder value. Its year-to-date return sits at a jaw-dropping 73.85%, which is rare in any market. The company’s P/E ratio is on the higher side at 51.03, suggesting it’s priced as a growth stock with high expectations. A dividend yield of 0.99% (fully franked, no less) won’t turn heads for income buffs, but it’s at least ahead of most tech or high-growth names. And with a market cap of $8.86 billion, Codan is a sizeable mid-cap player with room to grow.

The case for Pro Medicus

Pro Medicus sits at the cutting edge of digital healthcare, supplying advanced radiology and medical imaging systems across the globe. Hospitals and specialists use its solutions for everything from clinic scheduling to storing and analysing gigantic medical images. As per its most recent public description, the majority of Pro Medicus’s success story has played out in the US, where many prestigious hospitals have adopted its technology.

This is a genuine tech darling with a reputation for growth. But currently, it’s sporting an even loftier P/E ratio of 65.19 — a premium reserved for companies where investors expect mammoth expansion. The market cap, at $17.68 billion, puts Pro Medicus in a different league to Codan. It does pay a dividend (0.42% yield, fully franked), so there’s at least a nod to returning cash, but it’s definitely a token amount. What’s more, the company’s shares are actually down year to date by 24.84%, a reminder that even the best growth stories can be hit by buyer fatigue or lofty expectations.

Valuation comparison

There are clear valuation and size gaps between the two. Here’s a quick look at the most relevant numbers:

Metric	Codan	Pro Medicus
Market Cap	$8.86 billion	$17.68 billion
P/E Ratio	51.03	65.19
Dividend Yield	0.99% (100% franked)	0.42% (100% franked)
Year To Date Return	+73.85%	-24.84%
Earnings per Share	0.705	2.536

Codan looks much cheaper on P/E, yields more, and has sharply outperformed on share price this year. Pro Medicus, meanwhile, is the market’s clear growth favourite over the long haul, but carries a heavier price tag and steeper expectations.

Recent share price performance

Let’s take a look at how these stocks have fared in recent weeks.

Codan’s share price moved from $43.48 on 19 August 2026 up to $48.59 on 17 September 2026, a gain of around 12%. There were a few volatile days — most notably, a 12.42% jump on 20 August — but the overall momentum stayed very strong.

Pro Medicus tells a very different story. Its shares fell from $198.85 on 19 August 2026 to $169.22 on 17 September 2026 — a drop of about 15%. The ride included a few sharp single-day rallies, including a massive 11.88% spike on 18 August. But the prevailing trend these past weeks has been downward.

Which is the better buy?

If I have to call it between Codan and Pro Medicus right now, I’d lean toward Codan as the better value growth pick. Codan’s recent outperformance has been eye-catching, especially when set against Pro Medicus’s pullback this year. The valuation gap is clear, with Codan’s P/E notably lower and its dividend yield higher (while still fully franked).

Pro Medicus has enormous long-term potential and should remain high on the watchlist, but at a P/E over 65 and negative returns year to date, I think it’s priced too rich for my liking just now — especially when Codan is delivering growth and market-beating returns today. For me, Codan ticks more of the right boxes for Aussie investors after a rare combination of momentum and value in the growth space.

The post Codan vs Pro Medicus: Which ASX growth stock is better value? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.