UBS trims Xero target by 12% to A$106 and calls the share selloff overdone
UBS keeps its buy rating on Xero but cuts its target 12% to A$106, arguing the recent share-price drop overstates AI disruption fears. Shares trade at A$63.73.
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what happened
UBS analysts Lucy Huang and Ailsa Lei say the recent weakness in Xero shares reflects AI-related disruption fears that they believe are already built into the price, Market Talk reports. Their latest channel checks, they note, support the view that Xero holds up well defensively and keeps a strong position among accounting software providers.
UBS maintains its buy rating on the Australia-listed company but lowers its target price by 12% to A$106.00. The bank argues the current valuation assumes annual revenue growth averaging 7% over the next four years, and that average revenue per user stops rising from fiscal 2027. The analysts call that assumption too pessimistic.
At the time of reporting, Xero shares were down 1.1% at A$63.73.
why it matters
For investors following the ASX technology sector, a valuation reset on a major local software name can influence sentiment toward peers exposed to the same AI debate. The note shows how a broker can keep a positive rating while trimming its expectations for monetisation.
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sources
- Xero's Share-Price Weakness Looks Harsh to Bulls — Market Talk, 22 October 2026 at 01:55 UTC
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