Is it time to sell Xero?

Mr Southwell-Keely said Xero was growing well but that new cloud-based products from competitors such as MYOB, Reckon and Intuit would drastically alter the market. "The market is pricing Xero essentially on the basis of a hypothetical of an addressable market, but the market will change so much even in two years I’d say there is little to no chance of those predictions being accurate," the analyst said.

Select Equities analyst Mark Southwell-Keely has a blunt assessment: He says Xero’s stock is significantly overvalued, and the executive team should sell the company now. "Even half of what the stock is priced at now is way more than it’s worth," Mr Southwell-Keely said.

Cloud-based accounting software Xero has announced further growth in its Australian paying customer base as it seeks to address concerns that its stock may have been over-valued by investors keen to buy into the potential of cloud computing.

The company has touted plans to list in the United States as early as next year, and Mr Drury said keeping investors happy would be a priority in the years before it posted a profit.

Mr Drury said his team was focused on a "land grab" growth strategy, particularly in the United States and the United Kingdom.

Read more here: SMH

    

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