The Xero Limited (ASX: XRO) share price has been a strong performer over the last 12 months.
Since this time last year, the cloud-based business and accounting platform provider's shares are up 53%.
Digital cloud upload symbol illustrating modern online investing via Fool Australia platform.
Why has the Xero share price been on fire over the last 12 months?
The strong gain by the Xero share price over the last 12 months has been driven largely by the company's impressive performance during FY 2021.
For the 12 months ended 31 March, Xero reported an 18% increase in revenue to NZ$848.8 million. This was driven largely by its Australian, UK, and Rest of the World operations, which all reported strong revenue growth year on year.
This strong top line growth was underpinned by a 20% increase in subscribers to 2.74 million. This reflects a 20% increase in ANZ subscribers to 1.56 million and a 21% increase in International subscribers to 1.18 million.
And thanks to the achievement of further operating leverage, Xero reported a 39% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$191.2 million.
Can its shares go higher?
One broker that believes the Xero share price may now have peaked for the time being is Citi.
According to a recent note, its analysts have retained their neutral rating and $135.70 price target on its shares. This compares unfavourably to the current Xero share price of $136.94.
While the broker is a fan of Xero and believes demand for its platform is increasing, it appears to believe its valuation is getting stretched.
Citi commented: "We see the demand backdrop for Xero as positive driven by improving SMB trends as economies open up, strength in business formation boosting new customer acquisition and low insolvencies/bankruptcies keeping churn in check. Further, FY22e revenue growth should benefit from the PlanDay acquisition (3% impact). However, with the stock trading on 19x FY22e revenue, we do not see the risk-reward as compelling and maintain our Neutral rating."
