listed Xero falls as Jefferies cuts its PT amid AI risks and stiff US competition

By Reuters News

** Shares of ASX-listed Xero Limited XRO.AX fall as much as 6.5% to A$55.680, their biggest intraday pct fall since May 14

** Stock hits its lowest level in a week

** Jefferies cuts price target on Xero to A$67 from A$77

** Brokerage says AI unlikely to replace the software firm's accounting software but AI agents may own the user interface and workflow layer, running the risk of making XRO a "headless" accounting software, constraining pricing power

** Notes US small business accounting is getting more competitive and Xero needs to spend more on US marketing to win customers and build its brand

** Lauds XRO's product offering and its efforts to embed AI, but flags that monetisation of these products is still fairly limited

** Cuts its EPS estimate on the company by 8% for FY27 and 7% for FY8 due to higher interest costs and US losses

** Avg rating of 13 analysts is "buy" or higher; their median PT is A$118.5, LSEG-compiled data shows

** YTD, stock down 50.7%, including the session's moves

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