The Xero Limited (ASX: XRO) share price is in the red today, but could better days be ahead?
Xero shares are currently trading at $78.01, a 6% fall. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 1.68% today.
So what's going on with the Xero share price and what's ahead?
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Tech shares slide
Xero shares may be falling today, but they are not alone among ASX tech shares. The Megaport Ltd (ASX: MP1) share price is down nearly 7% today, while Appen Ltd (ASX: APX) shares are down 3% and Block Inc (ASX: SQ2) shares are tumbling nearly 9%.
The S&P/ASX All Technology Index (ASX: XTX) is down 3.68%.
Today's fall follows a tough Thursday for technology stocks in the USA. The Nasdaq Composite Index (NASDAQ: .IXIC) fell 1.37%. The United States Federal Reserve lifted interest rates by 0.75 basis points and indicated more hikes could be ahead. This is placing pressure on technology valuations and sparking fears of a recession, as my Foolish colleague James noted this morning.
However, Goldman Sachs analysts have recently recommended Xero as a buy and placed a $111 price target on the company's share price. This is a 42% upside on the current share price.
Analysts believe Xero is "well-placed" to navigate uncertainty given the "stickiness & importance of its software".
Xero reported a 19% boost in subscriber growth in FY22 to 3.271 million subscribers. The company's annualised monthly recurring revenue (AMRR) soared 28% to $1.2 billion while operating revenue lifted 29% to nearly $1.1 billion.
Commenting on the future outlook at the company's annual general meeting in August, chair David Thodey said:
We remain optimistic about the market opportunities for the Xero product portfolio – cloud based accounting is fundamental to the success of small businesses.
Xero share price snapshot
The Xero share price has fallen 49% in the past year, while it has shed 45% in the year to date.
In comparison, the benchmark ASX 200 Index has fallen nearly 12% in the past year.
Xero has a market capitalisation of about $11.7 billion based on the current share price.
