The Xero (ASX:XRO) share price is up 3% today. What's going on?

Why are Xero shares shooting higher today?

Sebastian Bowen

Author Bio

Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic, and social science, and he enjoys bringing this passion to life at the Fool. His investment philosophy is simple – buying high-quality companies at sensible prices. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and unwinds with a good book, newspaper, or record.

Areas of Expertise

Dividend investing
ETFs

Education

Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney

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Favourite Investment Quote

"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."
– Benjamin Graham

Published July 7, 2021 11:45 am AEST

The S&P/ASX 200 Index (ASX: XJO) is having a pretty decent start to this Wednesday's trading session. At the time of writing, the ASX 200 is up 0.33% so far today to 7,285 points. But there's one ASX company out there doing far better than that today. The Xero Limited (ASX: XRO) share price has had its Weetbix this morning, and is currently up 2.70% to $135.75 a share.

Investors will no doubt be pleased with this initial move today. After a couple of years of neck-turning growth, Xero has been somewhat stuck in the mud in 2021 so far. Remember, this is a company that was up roughly 80% in 2020, and before that, around 90% over 2019. But in 2021 so far, Xero shares are down a touch over 8% year to date. Not exactly what investors have come to expect from this cloud accounting software provider.

But enough dwelling on the past. So what's going on with the Xero share price today?

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price — Image source: Getty Images

Xero share price on the move

Unfortunately, it's not exactly clear. There are no official news or announcements out of Xero today. Well, apart from some paperwork outlining how some of Xero's restricted stock units have lapsed. But that's hardly market moving stuff by conventional wisdom.

Another factor at play here could be broker bullishness on Xero. As my Fool colleague James reported on Monday, investment bank broker Goldman Sachs is currently rating Xero shares as a 'buy', with a 12-month price target of $151 a share for Xero. That implies a potential future upside of 11.6%, even after today's gains. It's possible that this optimism is feeding into the Xero share price gains today.

Finally, it's worth noting that ASX tech shares across the board are enjoying healthy rises today. The S&P/ASX All Technology Index (ASX: XTX) is currently up a robust 2.26%, with major ASX tech shares like Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and WiseTech Global Ltd (ASX: WTC) all enjoying gains of more than 2% today so far.

At the current Xero share price, the company has a market capitalisation of $20.18 billion and a price-to-earnings (P/E) ratio of 1,059.6.

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