Macquarie tips Xero share price to hit $76.50

Other fundies have claimed Xero could hit a $100b valuation one day.

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The Xero Limited (ASX: XRO) share price hit a record high of $66.75 this morning but has room to run higher if the gun analysts at Macquarie Group Ltd (ASX: MQG) are on the money. 

According to financial news wires ,Macquarie's research analysts have slapped a bullish $76.50 12-month share price target on Xero and 'buy' equivalent rating.

In Australia Macquarie is well regarded for doing some of the most in-depth fundamental research going thanks to its deep resources, wide reach, and determination to be the best. 

I don't have a copy of the research report, but it's fair to say Macquarie's analysts are probably impressed with the online accounting platform's growth rates and market opportunity ahead. 

Yesterday, I even tipped Xero yesterday as my top stock to buy in August, as it looks a scalable business that boasts attractive SaaS economics, with a big market opportunity to still grow in the UK, US, Canada, Singapore, and South Africa for example. 

What about a $700 share price?

Almost exactly this time last year I also covered how high-profile local fund manager John Hempton had told The Australian Financial Review that he though Xero could be a $100 billion company one day. Assuming its scrip on issue remains the same that would equal a share price around $700! 

This Panglossian view of Xero might sound preposterous, but if we consider that its larger cloud accounting rival Intuit Inc. (NASDAQ: INTU) (running the Quickbooks platform) now has a market value of US$72.6 billion (A$106b) it isn't so crazy. 

In conclusion, I'd have to agree with Macquarie in rating Xero shares a buy. 

Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of 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.

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