S&P/ASX 200 Index (ASX: XJO) tech stock Xero Ltd (ASX: XRO) enjoyed another day of strong gains on Tuesday.
Shares in the business and accounting software provider closed the day trading for $161.20, up 1.05%.
With 153.12 million shares outstanding, that sees this fast-growing ASX 200 tech stock commanding a market cap of $24.68 billion.
Xero shares have come down from their all-time closing highs of $186.26, posted on 19 February, as the stock came under pressure alongside the broader market amid global trade war fears.
But the Xero share price has already rebounded 13% since the recent 7 April closing lows of $142.26.
At yesterday's close, the Xero share price is up 33% since this time last year.
And according to Shaw and Partners' Jed Richards, there could be more outsized gains on offer from this growth stock (courtesy of The Bull).
Here are three reasons to consider buying Xero shares today.
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ASX 200 tech stock on the growth path
"Xero is a global accounting software provider," said Richards, who has a buy recommendation on the ASX 200 tech stock.
The first reason he's bullish on the company is its solid growth outlook. This was reinforced when the company reported its half-year results (H1 FY 2025) back in November (the most recent reported results).
According to Richards:
We rate it as a strong contender in the growth stock category.
Xero delivered an impressive performance in its first half results in fiscal year 2025. Revenue of NZ$996 million was up 25% on the prior corresponding period. Analysts expect growing revenue and earnings moving forward.
The second reason you may want to add the ASX 200 tech stock to your holdings today is Xero's faithful and growing client base.
"The company enjoys a customer retention rate of 99%, which highlights its loyal user base. Also, Xero's subscriber growth continues to increase, with more than 4.2 million," Richards noted.
As for the third reason the tech share could keep on outperforming, Richards said, "Innovative features and strategic acquisitions further strengthen its position as a global leader in cloud accounting software."
Other half-year highlights supporting Xero shares
Atop the strong H1 FY 2025 revenue growth that Richards highlighted above, the ASX 200 tech stock reported a 52% year-on-year increase in adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to NZ$311.7 million.
And net profit after tax was up 76% to NZ$95.1 million.
"This result reinforces our ability to deliver on our strategy," Xero CEO Sukhinder Singh Cassidy said on the day of the results release.
"We're executing our strategy with focus and purpose, through disciplined investment aligned to our strategic priorities," Cassidy added.
