Why the Xero (ASX:XRO) share price outperformed in March

The Xero Limited (ASX: XRO) share price was a positive performer in March and charged notably higher. Here's why investors were buying…

| More on:
A young woman smiling and looking happy, indicating a positive share price movement on the ASX market

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The tech sector may have underperformed last month, but that couldn't stop the Xero Limited (ASX: XRO) share price from surging higher.

The cloud-based business and accounting platform provider's shares climbed a solid 7% over the period.

This compares favourably to a 1.8% gain by the S&P/ASX 200 Index (ASX: XJO).

Why did the Xero share price charge higher last month?

Investors were fighting to get hold of Xero shares last month after it announced two major acquisitions.

The first was the acquisition of Planday on 4 March for up to 183.5 million euros (A$284.2 million).

Planday is a leading workforce management platform provider with more than 350,000 users across Europe and the UK. Its platform simplifies employee scheduling, allowing businesses to forecast and manage their labour costs.

Commenting on the acquisition, Xero's CEO, Steve Vamos, said: "The acquisition of Planday aligns with our purpose to make life better for people in small businesses and their advisors. Planday's workforce management platform helps small businesses to respond to the rapidly changing nature of work. Planday also addresses the growing need for flexibility and rising compliance demands within the workplace."

Second acquisition

On 24 March, Xero announced the acquisition of Tickstar for up to 90 million Swedish kronor (A$13.6 million).

Tickstar is a Sweden-based e-invoicing infrastructure business that allows organisations such as Xero and its customers to connect to a global e-invoicing network. This enables faster and more secure transactions.

Xero's Chief Product Officer, Anna Curzon, commented: "The acquisition of Tickstar is an important step in our strategy to help small businesses digitise more of their workflows and get paid faster using cloud-based technologies. As more governments around the world adopt e-invoicing, Tickstar's technology will help our customers comply with existing and future legislation and realise the many benefits that e-invoicing brings."

The response

These acquisitions appear to have gone down well with analysts at Morgan Stanley.

Last week, the broker retained its overweight rating and lifted its target on the Xero share price to $140.00.

In addition, analysts at Goldman Sachs responded to the Planday acquisition by reaffirming their buy rating and $157.00.

Goldman said: "We see the transaction as a potential meaningful step for XRO in (1) providing a beachhead for core accounting expansion in Scandinavia and Continental Europe where Planday currently operates (we previously estimated Denmark/ Norway/ Sweden / Germany and France have a combined subscriber/revenue TAM of 6.2mn/NZ$1.5bn), (2) building out its App ecosystem (post Waddle, Hubdoc etc.); and (3) driving Planday penetration through Aus/NZ/Other subscribers."

Where next for the Xero share price?

The Xero share price may have outperformed in March, but based on Goldman Sachs' price target, it could still go meaningfully higher from here in the future.

Xero is currently trading at $130.93, which means potential upside of 20% over the next 12 months.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Happy work colleagues give each other a fist pump.
Technology Shares

Guess which ASX 200 technology stock has outperformed Nvidia over the past 5 years?

This company has been nothing short of impressive.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Technology Shares

Up 87% in 12 months: Why this ASX tech share is still a top buy

This technology business still has loads of potential, according to a fund manager.

Read more »

a group of three cybersecurity experts stand with satisfied looks on their faces with one holding a laptop computer while he group stands in front of a large bank of computers and electronic equipment.
Technology Shares

2 ASX 200 tech stocks Morgans rates as buys

The leading broker has named a couple of shares to buy right now.

Read more »