Xero Limited (ASX:XRO) experienced a significant intraday surge, with its stock price soaring 6.18%. The movement occurred during Friday's trading session, indicating strong investor interest in the cloud-based accounting software provider.

The price jump follows analysis suggesting the stock is significantly undervalued. Recent reports indicate Xero is trading at A$73.68, which is approximately 41.2% below its estimated future cash flow value of A$125.25, according to a discounted cash flow (DCF) model. This substantial discount to fair value based on cash flows has attracted investor attention.

Further contributing to the positive sentiment is Xero's strategic integration with AI platform Claude, which is expected to enhance operational efficiencies and financial insights for small businesses globally. The company's earnings are forecast to grow at 22.33% annually over the next three years, outpacing the broader Australian market's growth rate of 12.1%. This comes after the stock has declined 59.5% over the past year, making the current valuation appear particularly attractive to value investors.