Xero says surge in stock reflects upbeat outlook for software sector
By Paul McBeth
Dec. 31 (BusinessDesk) – Xero Ltd., the accounting software company, says upbeat appraisals of the software sector’s outlook on a 56% surge in the stock price this month.
The explanation comes after bourse regulator NZX Ltd. issued a ‘please explain’ notice on Xero’s share price when it hit a record high $3.15 today. That gain was subsequently pared to a 2% increase to $3. The shares have climbed 85% this year.
Xero has been exponentially growing revenue and hopes to break even in 2011. First-half sales almost tripled to $3.78 million, though that was overcome by expenses resulting in a net loss.
“We are aware that industry analysts have predicted the Software as a Service sector to be high growth in the coming years,” company secretary Linda Cox said in a statement. “We have recently experienced increased investor interest from overseas parties along with an increase in the number of new shareholders on the Xero register.”
Xero’s share price has more than doubled since October when it attracted PayPal founder Peter Thiel to help guide its expansion into America and inject $4 million into the company.
Shares in fellow software company Diligent Board Member Services Inc. climbed 7.9% to 68 cents in trading today, and Diligent’s stock has soared 152% this year after it reached a break-even cash-flow in the September quarter.
Alan Moore, who manages $600 million at Milford Asset Management, says the firm is a company to watch next year that “really stands out as the leader in the market.”