The Xero Limited (ASX: XRO) share price was undeterred by a less than positive broker note from Macquarie today.
By the end of the session, shares in the cloud-based accounting software provider were up 2.5% to $145.84. In contrast, the S&P/ASX 200 Index (ASX: XJO) gained 0.28% today. Following the move, the Xero share price is now only 7.6% away from its 52-week high of $157.99.
So, what did Macquarie have to say about one of the largest listed tech companies in Australia?
Image source: Getty Images
US market, hard to get Intuit
Four days after Xero released its half-year results, Macquarie analysts have painted a bearish view of the Australian accounting platform.
Although the company posted year-on-year revenue growth of 23% to NZ$505.7 million, the broker retained its underperform rating on the Xero share price.
The negative viewpoint mirrors that of the market upon the release of Xero's results on Thursday last week. On that day, shares in the company sank 6.2%. This was largely due to reality not being on par with expectations.
For Macquarie's analysts, the problem revolves around the company being too focused on its North American market, according to the broker note. Simultaneously, there are concerns about the Australian and New Zealand market becoming saturated.
While Xero's management is prioritising growth in the North American market, analysts at Macquarie believe the established competition might be too much to combat. The competition in question is US-based QuickBooks owner Intuit Inc (NASDAQ: INTU).
Here's what Macquarie analysts had to say:
Given their size, capital and penetration of the US market, we think Xero will have limited success competing against QuickBooks in the US,
For these reasons, the broker tagged the Xero share price with a price target of $130. This would suggest a potential downside of nearly 11%.
What do other analysts think of the Xero share price?
On Friday, my Fool colleague James shared a different take on the Xero share price from another analyst. The team at Citi felt that the weakness in Xero shares presented a buying opportunity.
Although Citi expected stronger numbers from the ASX-listed tech company, it still went ahead and upgraded Xero to a buy. Alongside the rating upgrade, Citi set a price target of $160 per share on the software provider.
