Morningstar believes UK still 'winnable' for Xero after social media controversy

By Reuters News

** Morningstar thinks UK still a winnable and valuable opportunity for Australia-listed Xero XRO.AX despite recent social media outrage

** Accounting software provider stirred controversy in the UK after sponsoring an influencer ad which promoted connecting its software to Anthropic's Claude to save accounting costs

** Investment research firm says Xero will likely have to make some accommodation, is of view that accountants have become more sensitive to threats to livelihoods due to artificial intelligence-related disruption

** Adds that in the UK, co still relies on accountants' goodwill, which has already been damaged after steep price hikes in recent years

** Morningstar thinks shares undervalued given markets' belief that its software can be replicated with AI, or AI will disintermediate broader accounting profession, neither of which it thinks to be remotely likely

** Shares last closed down 4.1% at A$62.78, down 44.9% YTD

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