Jefferies and Morningstar flag tough near-term growth for Australia's Xero

ReutersMay 15, 2025 8:02 PM

Accounting software maker Xero XRO.AX is nearing market saturation and likely to encounter challenging growth conditions in Australia and New Zealand - analysts at Jefferies and Morningstar

Jefferies downgrades rating on Xero XRO.AX to "hold" from "buy"; raises PT to A$194.8 from A$185

Company on Thursday reported FY25 adjusted EBITDA of A$640.6 mln, higher than last year but 2% below Visible Alpha consensus

"XRO may sacrifice profitability in the short term to chase growth particularly in the U.S." - Jefferies

"We expect the company will have to spend a larger share of its sales and marketing on replacing lost customers, further hampering growth" - Morningstar

Jefferies cuts FY26 and FY27 EBITDA estimates for Xero by 11% and 5%, respectively

Twelve out of 15 analysts rate the stock "buy" or higher, three rate it "hold"; their median PT is A$186.5, according to data compiled by LSEG

Stock up 8% YTD, as at last close

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