The Xero (ASX:XRO) share price is smashing the ASX 50 this month

The final day of April is here and the Xero (ASX:XRO) share price is leaving the ASX 50 in its dust, up 12% this month. Here’s the lowdown.

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Here we are on the final day of April and the Xero Limited (ASX: XRO) share price is leaving the S&P/ASX 50 Index (ASX: XFL) in its dust. The company’s shares are up more than 12% this month against the index’s 3.5% gains.

Xero shares are now worth a tidy $142.31 each, at the time of writing, and April’s gains have come without the company releasing a single price-sensitive market update the entire month. 

Whilst it’s impossible to know exactly what’s driving positive investor sentiment towards Xero, let’s take a look at what’s been happening for the company…

How has Xero been performing?

As mentioned, we haven’t heard any earth-shattering news from the Aussie business and accounting software developer during April. In March, however, the company announced it was acquiring two companies, Planday and Tickstar, which will push the company outside of its usual market and into the workforce management space.

The acquisition of both these companies was seen as a positive move by Goldman Sachs. This month, the major broker reiterated its buy rating on the company, setting its Xero share price target at $153.

Goldman’s upsides on Xero made for pretty optimistic reading. It highlighted the company’s limited competition, which it believes supports pricing power. The broker also flagged Xero’s high level of digitisation and VAT compliance as well as increasing regulation supporting e-invoicing. 

Xero is aiming to expand into Scandinavia which, despite the region’s size, is a potentially lucrative, tech-mature market. Goldman also gave a nod to these plans, tipping a potential addressable market of more than 2 million subscribers for the fintech to target.

The other possibility for all this optimism surrounding Xero shares is actually that they are simply recovering from previous losses. The company’s share price dropped a whopping 30% from its all-time high of almost $158 set in December to around $108 in early March. So, could the company’s recent gains just be a market correction…of a correction?

April has also been a strong month for the S&P/ASX All Technology Index (ASX: XTX), with the index beating the ASX 50 by around 7%. 

Xero share price snapshot

The Xero share price has added almost as much value in the past 12 months as it did in the prior 10 years. But those dramatic losses between January and March this year (a $40 loss in two months) show Xero shares can still be as volatile as they come.

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Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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