Owners of Xero Limited (ASX: XRO) shares are having zero fun in 2022. The tech stock darling has lost more than half its value over the year to date, with the Xero share price down 51%.
But it's certainly not a case of zero hope for shareholders of the accounting software provider.
At least two top brokers are advocating a buy on Xero shares. And given the Xero share price just hit a new 52-week low today, perhaps it's time to buy for the long term.
What's been happening with the Xero share price?
The Xero share price hit a new 52-week low today at $70.34. It closed the session on Thursday at $71.75.
Things were looking up for Xero investors recently. The stock dropped into the early $70-range back in June and then regained some ground to land in the $90-plus range in early September.
That recovery was unfortunately short-lived. Here we are back in the early $70-range.
A technical analyst might point out a pattern here. The last two times Xero shares have dropped to this price level, they have found new support from ASX investors and have gone back up.
But here at The Fool, we don't advocate technical analysis for ordinary investors. As the saying goes, past performance is not necessarily a reliable indicator of future performance.
Our Fool philosophy is to focus on the fundamentals of a business and purchase with a buy-and-hold mentality.
So, let's see what the experts have been saying about the long-term outlook for Xero.
Are Xero shares a buy?
As my Fool colleague James notes, top broker Goldman Sachs considers Xero "our preferred large-cap technology name in ANZ" and a company that has "a compelling global growth story".
Goldman also says Xero is "well-placed to navigate this uncertainty given the stickiness & importance of its software."
The broker has a buy rating and a $111 price target on Xero shares. That's a potential 55% upside from here.
Also this month, Citi retained its buy rating on Xero with a 12-month share price target of $106.80.
As we've reported recently, experts are recommending that investors consider buying oversold high-quality ASX growth stocks caught up in the broader market sell-off.
In a Livewire article, Tim Richardson of Pengana International Equities Limited said:
The indiscriminate sell-off in growth companies this year has extended beyond those with little or no cash flow and dubious business models.
Quality growth stocks across the board have underperformed value stocks, leaving some great companies priced at more attractive valuation levels. This implies higher potential returns over the medium-to-long term.
It's a classic case of throwing the baby out with the bathwater. It may sound bad but it can create amazing buy-the-dip opportunities for value investors.
How's Xero travelling in 2022?
In FY22, Xero reported a 29% increase in revenue to NZ$1.1 billion and a 28% jump in annualised monthly recurring revenue (AMRR) to NZ$1.2 billion in FY22.
There was also an 11% bump in earnings before interest, tax, depreciation, and amortisation (EBITDA) to $212.7 million.
Total subscribers increased by 19% to 3.3 million, with a 7% boost in average revenue per user.
Xero didn't make a profit in FY22, with a net loss after tax of ($9.1 million). But Xero has demonstrated it can make a profit. In FY21, its net profit after tax (NPAT) was $19.8 million.
