’Reddit is built for this moment’ - Stock soars on crushed earnings
On Monday, BTIG analysts upheld their positive stance on MercadoLibre (NASDAQ:MELI) shares, maintaining a Buy rating and a $2,500.00 price target. The company, currently valued at $106.4 billion, has demonstrated impressive performance with a 54.8% return over the past year. The firm’s analysts highlighted Latin America’s economic resilience amidst global macroeconomic uncertainty, particularly noting the minimal reciprocal tariffs impacting Brazil and Argentina, and the absence of such tariffs for Mexico, despite other types of tariffs being applied by the U.S. According to InvestingPro analysis, the stock is trading near its Fair Value, with 14 key investment tips available to subscribers.
MercadoLibre is anticipated to release its first-quarter 2025 financial results on May 8, and BTIG’s analysts have expressed a constructive view on the company’s shares leading up to the earnings report. The company has shown robust growth with revenue increasing 37.5% in the last twelve months to $20.8 billion, maintaining impressive gross profit margins of 52.7%. This optimism is supported by solid channel checks and data indicating that retail spending in Brazil increased by 3.5% in March as per the ICVA retail index from Cielo. Despite a slight deceleration from the fourth quarter of 2024, the analysts noted that the figures would have been closer to the previous quarter’s growth rate if not for the timing of Easter.
The analysts also pointed out that, while the overall economic outlook remains uncertain, current indicators suggest a stable environment. Brazil’s significant commodity exports to China and the expected increase in the Selic benchmark interest rate to between 14.75-15.00% by the end of 2025 are key factors to watch. However, they observed stable trends in MercadoLibre’s credit quality, with new non-performing loan (NPL) formation in the company’s FIDC securitizations at 4.6% in March, a slight increase from 4.4% in December. This was deemed healthy, especially considering the seasonal benefits typically seen in December due to extra holiday pay in Brazil.
The analysts concluded that despite the FIDC securitizations not providing a complete picture of credit performance, as they exclude credit card data, they still offer valuable insights into the general credit quality trends at MercadoLibre. With these factors in mind, BTIG remains bullish on MercadoLibre’s stock as the company approaches its quarterly earnings announcement.
In other recent news, MercadoLibre announced a significant investment of $5.8 billion in Brazil, marking a 47.8% increase from the previous year. This investment is expected to create approximately 14,000 jobs, underscoring Brazil’s importance as a key revenue driver for the company. Meanwhile, BTIG analysts maintained a Buy rating with a $2,500 price target on MercadoLibre, highlighting the company’s strong performance in its Fintech Services segment, which saw a 76% increase in total payment volume during the fourth quarter of 2024.
Cantor Fitzgerald adjusted its price target for MercadoLibre shares to $2,400 from $3,000, while maintaining an Overweight rating, citing factors like foreign exchange movements. Benchmark analysts initiated coverage with a Buy rating and a $2,500 price target, pointing to MercadoLibre’s growth potential in Latin America’s low online retail penetration market. Furthermore, MercadoLibre plans to expand its investment in Mexico, aiming to hire an additional 10,000 employees by 2025 to strengthen its technological and logistical operations.
These developments reflect MercadoLibre’s ongoing strategic initiatives to capitalize on growth opportunities in Latin America. The company’s expansion plans in Brazil and Mexico indicate a focus on increasing its market presence and operational capacity. Despite the adjustments in price targets, the outlook from analyst firms like Cantor Fitzgerald and Benchmark remains positive, emphasizing the company’s potential for sustained growth in the region.
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