Xero Ltd's stock soared 7.76% during intraday trading on Thursday, as positive analyst commentary fueled investor optimism.

UBS analysts reiterated their buy rating on Xero, highlighting several potential catalysts for the stock to rerate. They pointed to the accounting-software provider's upcoming fiscal 2027 guidance, expected next month, and any positive news regarding growth at its Melio payments unit as key factors that could spark the stock.

The analysts added that the market may not be fully appreciating Xero's defensiveness against the threat of AI disruption or the value embedded in its Melio business unit, contributing to the positive sentiment driving the share price higher.