Is the Xero Limited (ASX:XRO) share price in the buy zone?

The Xero Limited (ASX: XRO) share price had a positive finish to the week on Friday.

The accounting software company’s shares finished the day over 3% higher at $41.98, which means they finished a volatile week mostly flat.

Today’s gain is especially impressive because a bearish broker note out of Credit Suisse hit the wires this morning declaring Xero as a sell.

Why is the broker bearish on Xero?

According to the note, Credit Suisse has an underperform rating and $35.00 price target on Xero’s shares.

The broker held firm with its underperform rating after Xero put the money raised from its US$300 million convertible notes offering to work this week.

Although the broker sees the acquisition of Instafile as a positive and believes the new capabilities that this business and the Hubdoc acquisition provide are helpful, at this stage it appears to think subscriber growth is key.

And, unfortunately, the broker suspects that its ANZ subscriber growth is likely to ease in the near future.

But not all brokers are bearish on Xero. A more positive note came out of Morgan Stanley this week.

That note gave the company’s shares an overweight rating and $50.00 price target. This price target implies potential upside of over 19% for Xero’s shares over the next 12 months.

According to the note, the broker has looked into the company’s U.S. prospects and doesn’t believe it will be a major winner in the market.

However, it doesn’t feel that it needs to be in order to justify its share price. Morgan Stanley feels that success in other international markets and the ANZ market will be enough to drive its share price higher in the medium term.

Should you invest?

I agree with Morgan Stanley’s view and believe Xero would be a great buy and hold investment option along with fellow tech stars Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).

If you like Xero then I would recommend you check out these up and coming tech shares that have been rated as buys.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!