ASX-listed Xero falls; Morningstar cuts valuation, citing weak Melio prospects

** Xero XRO.AX falls as much as 1.2% to A$160.240; marks biggest intraday pct loss since September 3

** Morningstar trims fair value estimate by 2% to A$100, citing material overvaluation

** Says Melio's buyout won't materially improve co's conversion or retention of customers

** Notes sizable drop in stock price after announcement of acquisition of U.S. fintech firm Melio Payments

** Says Xero nearing market saturation in Australia, New Zealand as evidenced by fast-deteriorating returns on sales, marketing spending there

** Stock rated "buy" on avg; median PT is A$205, per data compiled by LSEG

** YTD, XRO falls 4%