Xero Looks Relatively Immune to Coronavirus but Remains Overvalued

Narrow-moat Xero will not report its interim financial results until November 2020, but we have reviewed our financial forecasts following several reasonably minor announcements during the past month. We have cut our short-term revenue and earnings forecasts as a result of the coronavirus pandemic, but Xero’s fair value depends largely on its long-term prospects, which are not sufficiently affected to justify changing our AUD 46 fair value estimate. At the current market price of around AUD 93, we continue to believe the stock is significantly overvalued.