The Xero Ltd (ASX: XRO) share price was breaking records last week.

The cloud accounting platform provider's shares hit a record high of $172.94 before closing the week at $172.61.

This means that its shares are now up 72% since this time last year.

But can they go even higher? Could they even break the $200 mark in the near future? Let's see what one leading broker is saying.

Half year results response

The catalyst for taking the company's shares to record levels last week was the release of another stellar half year result.

While not without a few minor negatives, Goldman Sachs saw a lot to like from the half. Commenting on the good, the broker said:

Key positives: (1) The much lower than expected 1H25 opex ratio – even if benefiting from capitalized R&D – drove a stronger than expected earnings outcome. Although the ~73% full year target was re-iterated (GSe revised 72.4%) this now requires a material acceleration in opex growth in the 2H to achieve (ex NZ$18mn Xerocon costs, implies +NZ$64mn increase S&M, and +$70mn in PD&D). Although we expect investment to increase in 2H25/FY26, supporting an increased focus in the US opportunity, we don't expect this level of investment to occur, and forecast modest margin expansion into FY26 – noting XRO reiterated that it will invest in a disciplined, targeted and careful manner, while its recently announced Gusto Payroll integration (a key gap in the 3×3) to be built through CY25 – suggesting another 12+ months before its US product offering is fully ready;

(2) Strong Platform revenue contribution from Payments (+65% YoY to c.NZ$45mn) driven by TPV growth (+34%) and improved unit economics with partners – which should support 2H given full-period benefit; (3) Underlying net sub adds strong across both ANZ/UK (+112k/+49k) with continued low levels of churn (+1bps to 1.00%) and Xero upbeat on the opportunity from MTD IT in the UK – estimated to impact ~2.3mn new small business.

In respect to those negatives, Goldman highlights the following:

Key negatives: The c.3% revenue miss in 1H25 vs. GSe was attributed to a softer than expected ARPU growth – relative to our estimates this related to some ARPU seasonality in NA, but more significantly was the increasing divergence between AMRR and reported revenue, particularly in international regions, driven by promotional activity (i.e. 6m of 90% off).

The sum of the above was a modest increase to the majority of its earnings estimates, with the broker revising "FY25-27 EBIT by +1% to -1% and EPS +3% to +8%."

Is the Xero share price heading beyond $200?

In response to the results, Goldman has held firm with its conviction buy rating and $201.00 price target. Based on the current Xero share price, this implies potential upside of 16.5% for investors.

The broker continues to rate Xero highly due to its significant total addressable market (TAM). It also feels that now is an attractive entry point into a global growth story. Goldman concludes:

We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company's pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated.