Xero Limited: Is the importance of Accountants to Xero's future under-appreciated? … yes, we think so

Research evidence excerpt

Xero Limited: Is the importance of Accountants to Xero's future under-appreciated? … yes, we think so

Idea

May 14, 2026 09:03 PM GMT

Morgan Stanley Australia Limited+MXero Limited | Asia Pacific Andrew McLeod

Equity Analyst

Is the importance of Andrew.Mcleod@morganstanley.comChris Boulus +61 2 9770-1692

Chris.Boulus@morganstanley.com +61 2 9770-1529

Accountants to Xero's future Angela Sutcliffe

Angela.Sutcliffe@morganstanley.com +61 2 9770-1612

under-appreciated? … yes, we

Xero Ltd (XRO.AX, XRO AU)

Australia Media, Internet and Technology | Australiathink so

Stock Rating Overweight

Industry View Attractive

Price target A$130.00

Reaction to earnings Shr price, close (May 14, 2026) A$73.68

Mkt cap, curr (mn) NZ$14,839

Strengthens our thesis Modest upside Modest revision higher

Impact to our thesis Financial results versus consensus Direction of next 12-month Fiscal Year Ending 03/26 03/27e 03/28e 03/29e

consensus EPS

Revenue, net (NZ$ mn) 2,752 3,638 4,371 5,141

Source: Company data, Morgan Stanley Research EBITDA (NZ$ mn) 757 919 1,121 1,508

EPS (NZ$)** 0.77 1.37 1.86 3.52

XRO reported FY26 earnings ahead of expectations, and first Prior EPS (NZ$)** 1.32 1.30 1.78 - EV/EBITDA 20.9 15.5 12.4 8.8

time FY27 guidance sees us lift Rev by 6%, EBITDA by 8% and P/E 117.3 65.7 48.4 25.5

EV/revenue* 5.8 3.9 3.2 2.6

EPS by 5%. The business is operationally in good shape.

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

Notwithstanding that, shares closed -9% as AI disruption fears framework** = Based on consensus methodology

over-ruled. We remain fundamentally positive - keep OW. *e == GAAPMorganorStanleyapproximatedResearchbasedestimateson GAAP

Relevant Recent Research

Key Takeaways

FY26 revenue +31% to NZ$2.75bn vs. NZ$2.1bn, 0.4%% ahead of consensus.