The Xero Limited (ASX: XRO) share price is falling on Wednesday.
In afternoon trade, the cloud accounting platform provider's shares are down 2% to $77.99.
This follows broad market weakness and particularly heavy selling in the tech sector today. The latter sees the S&P/ASX All Technology Index trading 1.3% lower this afternoon.
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Is the Xero share price good value?
According to a note out of Citi, its analysts believe the Xero share price could be great value at the current level.
The note from Tuesday reveals that the broker has retained its buy rating and $106.80 price target.
This price target implies significant potential upside of 37% for investors over the next 12 months.
What did the broker say?
Citi has been looking at the UK market and has a few concerns over rival Sage's small business plans.
However, the broker believes the market is large enough for Xero to continue growing at a strong rate despite this. As a result, it continues to remain bullish on the company's long term outlook.
Its analysts explained:
From Xero's perspective, the two key takeaways from Sage's Small Business focused investor/analyst event were that: i) Sage is stepping up investment in the accountant channel both from a product as well as go-to-market perspective; and ii) Sage is also increasingly focusing on the sole trader/self-employed segment of the market ahead of the next phase of MTD. We do see a resurgent Sage as a threat to Xero's UK growth and could result in Xero having to increase investment in the UK, however we see the addressable market as large and continue to forecast strong growth for Xero in the region.
