The Xero Limited (ASX: XRO) share price is continuing its poor run on Wednesday.
In afternoon trade, the cloud accounting platform provider's shares are down almost 4% to $135.16.
This latest decline means the Xero share price is now down 10% this week.
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Is the Xero share price in the buy zone?
One leading broker is likely to see the weakness in the Xero share price as a buying opportunity.
According to a recent note out of Goldman Sachs, its analysts have a buy rating and $165.00 price target on the company's shares.
This pullback means there could be 22% upside for the Xero share price over the next 12 months.
Why does Goldman like Xero?
Goldman Sachs is bullish on the Xero share price due to its belief that the company is well-placed for growth over the coming years.
In fact, the broker expects the company's revenue to double between now and FY 2024. It expects this to be driven by increases in subscriptions, its average revenue per user, and acquisitions.
The broker commented: "We expect XRO revenue to double across FY21-24E (+26% CAGR), driven by: (1) ARPU growth from the recently announced price rises (benefiting FY22/23E) and the introduction of this app store fee (benefiting FY23/24E); (2) Subscriber growth, given accelerating subscriber growth across all geographies in 2H21, and strong recent traction from its Enterprise strategy (i.e. recently signed a Global partnership with DFK, the 7th largest Global Accounting Association, to complement agreements with BDO/RSM); and (3) M&A, with the Planday acquisition to contribute +3% growth in FY22E."
In addition, Goldman sees a huge opportunity for Xero to monetise its app ecosystem. This follows the recent launch of the Xero App Store.
Its analysts said: "Although the quantum of app attachment rates is uncertain, we estimated that a 15% app store fee could open up an incremental NZ$1.4bn of TAM, with these earnings likely to be 100% margin."
All in all, the broker believes the Xero share price is good value at this level. Especially given its positive long term growth outlook.
