The Xero Limited (ASX: XRO) share price was out of form on Monday and started the week with a small decline.
The cloud-based business and accounting platform provider’s shares ended the day 0.5% lower at $112.60.
This latest decline means the Xero share price is now down almost 29% from its 52-week high.
Is the Xero share price in the buy zone?
The market appears reasonably undecided on whether or not the recent weakness in the Xero share price is a buying opportunity.
Following the announcement of its acquisition of Planday last week, analysts at Goldman Sachs retained their buy rating and $157.00 price target.
This price target implies potential upside of almost 40% for its shares over the next 12 months.
The broker believes the acquisition will provide it with a meaningful step into Europe. It also notes that it will help build out its app ecosystem, which is something Goldman is particularly positive on over the long term.
Sitting on the fence
Not everyone is as bullish as Goldman Sachs. One broker that is sitting on the fence is Macquarie. This morning it reaffirmed its neutral rating and trimmed its price target down to $120.00.
While the broker believes the acquisition could contribute around 10% of Xero’s total revenue over the long term, it has reduced its near term estimates to reflect its integration.
Macquarie’s price target implies potential upside of just 6.6% for the Xero share price over the next 12 months.
Finally, analysts at UBS remain bearish on Xero. While it sees positives in the acquisition, it isn’t enough for a change in rating.
UBS continues to believe its shares are overvalued at the current level. In light of this, it has reaffirmed its sell rating with a slightly higher price target of $79.50.
Based on the current Xero share price, this equates to potential downside of almost 30% over the next 12 months.
Time will tell which broker is correct.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.