Follow MercadoLibre to never miss an important update.
Cantor Fitzgerald maintained its overweight rating, which is a signal they expect the stock to perform better than the broader market. This target suggests the stock could rise about 33 percent from its current level. While the stock has fallen recently, the average target among all analysts remains even higher at about $2,207. This suggests that professional researchers generally see the recent drop as a disconnect from the company's actual growth in e-commerce and banking.
Source: Cantor Fitzgerald
After MercadoLibre reported its November results, we updated our fair value. We changed our rating from Buy to Watch and lowered our projections for profit margins over the next two years. We have added the impact of Mexican tax reforms and the upfront costs of issuing new credit cards to what we track.
MercadoLibre brought in $10.75 billion in revenue last quarter, growing 45 percent from a year ago and slightly ahead of what analysts expected. The growth was led by its shopping platform, where the value of goods sold rose 38 percent, and its fintech arm, Mercado Pago, which processed $109 billion in payments. Brazil remains the strongest market for both sides of the business.
However, profit came in at $8.83 per share, missing the $9.27 that Wall Street expected. This was largely due to the high cost of building out its own logistics and delivery fleet, which is the physical network that allows it to ship faster than rivals. While these costs eat into today's profits, they are the main reason the company is gaining market share and making it harder for competitors like Amazon to catch up in Latin America.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
MercadoLibre is scheduled to report its quarterly results today. Analysts are looking for revenue of about 10.7 billion dollars and earnings of roughly 9.27 dollars per share. The numbers to watch are in the credit business, specifically how many new credit cards were issued and whether the company is keeping its loan losses under control. We will also look for updates on its logistics network, which remains its biggest advantage over rivals in Brazil and Mexico.
Citigroup upgraded the company to a buy rating on Tuesday. This move comes as the stock has faced recent pressure, leaving it trading at about $1,658, while the average target among analysts who follow the company is much higher at $2,160.
An upgrade from a major firm like Citigroup suggests they see the recent drop as a buying opportunity rather than a sign of trouble with the business itself. For a long-term owner, this helps confirm that the company's core position in Latin American retail and banking remains attractive despite the recent market swings.
Source: Citigroup
Management has missed its profit targets in five of the last eight quarters, showing how difficult it is to forecast earnings while aggressively spending on logistics and credit growth.
| Expectation | |
|---|---|
| EPS | $10.14 |
| Revenue | $11.99B |
Follow MercadoLibre to get the latest and most important updates.
Follow MELI