2 exciting ASX growth shares analysts rate highly

Xero Limited (ASX:XRO) and this ASX growth shares are rated highly by analysts. Here’s what you need to know about them…

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As a big fan of growth shares, I feel very fortunate that the ASX is not short of quality options for growth investors.

But with so many to choose from, which ones should you buy? Two top growth shares for investors to look at today are listed below. Here’s what you need to know about them:

ELMO Software Ltd (ASX: ELO)

The first growth share to look at is ELMO. It is a growing cloud-based human resources and payroll software company that provides businesses in the ANZ and UK markets with a unified platform that streamlines a wide range of everyday processes.

ELMO has been growing at a very strong rate over the last few years and has continued the trend in FY 2021. This is being driven by organic growth and the acquisitions of complementary businesses Breathe and Webexpenses.

ELMO recently released a trading update and revealed that it expects to report annualised recurring revenue (ARR) of $83 million to $85 million in FY 2021. This will be up 50.5% to 54.2%, respectively, on FY 2020’s ARR of $55.1 million.

The good news is that this is still only a small slice of its overall market opportunity. Management estimates that it has a $12.8 billion opportunity across the ANZ and UK markets.

Morgan Stanley is a fan of the company. Last week it retained its overweight rating and $9.70 price target on its shares. The ELMO share price ended the week at $4.72.

Xero Limited (ASX: XRO)

Another ASX growth share to look at is Xero. It provides small and medium sized businesses with a cloud-based business and accounting solution.

Xero has been growing strongly over the last few years thanks to its international expansion, acquisitions, and the transition to the cloud. Positively, all these drivers remain in place and should be supported by its burgeoning app ecosystem.

It is this app ecosystem that has analysts at Goldman Sachs particularly excited. They believe that if Xero can successfully monetise the ecosystem and execute its international expansion, it could support decades of strong revenue growth.

The broker currently has a buy rating and $153.00 price target on its shares. The Xero share price ended the week at $127.20.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended Elmo Software. 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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