This ASX 200 tech giant is down 30% in 2026. Can it make a comeback?

Could this beaten-down ASX tech stock finally be turning a corner?

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Xero Ltd (ASX: XRO) shares are edging higher on Thursday.

At the time of writing, the accounting software stock is up 0.82% to $81.37.

It has been a much better story over the past month, with Xero shares gaining around 14% after falling to a 7-year low of $61.45 in late July.

But even after that rebound, the stock is still down close to 30% since the start of 2026 and more than 50% below its 52-week high of $166.

So, can Xero shares continue their comeback?

A person bounces another up high from a seesaw as the one in the air looks through a telescope into the future.

Image source: Getty Images

Xero is still growing

The share price has taken a beating, but the business itself is still growing at a decent rate.

Xero reported FY26 operating revenue of NZ$2.75 billion, up 31%, while annualised monthly recurring revenue jumped 37% to NZ$3.27 billion.

The company also added 506,000 customers during the year, taking its global customer base to 4.92 million.

Average revenue per customer rose 23% to NZ$55.44, while adjusted EBITDA increased 18% to NZ$757.4 million.

Net profit went the other way, falling 27% to NZ$167.4 million, with costs from the Melio acquisition weighing on the result.

Still, management expects another strong year ahead.

FY27 revenue guidance sits between NZ$3.62 billion and NZ$3.73 billion, which points to growth of around 30% at the midpoint.

And Xero still has plenty of room to grow. The company has previously estimated its total addressable market at around 100 million small and medium-sized businesses.

That compares with fewer than 5 million customers today.

What do the brokers think?

Despite the weak share price, several brokers still see plenty of upside.

Citi has a buy rating and $113.60 price target, while Morgan Stanley is even more bullish with a $130 target.

UBS sits at $127, Ord Minnett at $110, and Morgans at $111.

But there are some more cautious views as well. RBC Capital has a hold rating and $85 target, while Jefferies has a $77 target.

According to TipRanks, the average 12-month price target is $99.29.

That would put the shares around 22% above where they trade today.

Is the comeback getting started?

I think there's still a bit more to prove before this rally can really get going.

Xero needs to keep growing while integrating Melio and making sure higher costs don't eat too far into earnings.

However, the rebound from its $61.45 low is at least a sign that investors are starting to take another look at the stock.

At $81 a pop, Xero shares certainly look more appealing than they did when they were swapping hands for close to $200.

If the company delivers on FY27 guidance and keeps making progress in the US, the shares should keep climbing.

Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Jefferies Financial Group and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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