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On Wednesday, BTIG analysts maintained their Buy rating and $2,500.00 price target for MercadoLibre (NASDAQ:MELI) shares, aligning with the broader analyst consensus that sees up to 31% upside potential. With a market capitalization of $97 billion and an impressive "GREAT" financial health score from InvestingPro, MercadoLibre stands as a prominent player in the Broadline Retail industry. The firm’s analysis followed the release of fourth-quarter 2024 results from PicPay, a private competitor, allowing for a comparison between MercadoLibre and its peers in the payments and e-commerce space.
MercadoLibre demonstrated robust performance, particularly in its Fintech Services segment, which saw a 76% increase in total payment volume (TPV) in USD during the fourth quarter of 2024. This growth contributed to the company’s impressive 37.5% year-over-year revenue increase and strong gross profit margin of 52.7%. Although MercadoLibre does not provide a country-level breakdown of its Fintech Services TPV, analysts believe that the growth in Brazil is likely in line with the company’s overall performance, and local currency growth could be even higher due to the real’s depreciation. For deeper insights into MercadoLibre’s financial metrics and growth potential, InvestingPro subscribers can access comprehensive Pro Research Reports covering 1,400+ top stocks.
In comparison, PicPay reported a 45% growth in total TPV, with its Wallet & Banking TPV and merchant acquiring segment growing by 45% and 39%, respectively. Despite MercadoLibre’s Digital Acquiring TPV in Brazil growing by 32% year-over-year, which was below PicPay’s 39%, it is important to note that MercadoLibre operates on a significantly larger scale, estimated to be approximately ten times the size of PicPay.
Regarding user growth, PicPay increased its users by 4% quarter-over-quarter, adding 1.5 million users. MercadoLibre, while not providing country-specific data, reported an overall increase of 5.0 million Fintech monthly active users (MAUs) in the quarter. Given that Brazil typically accounts for over half of MercadoLibre’s Fintech KPIs, it is inferred that the company’s MAU growth in Brazil surpassed PicPay’s quarterly user growth.
Both companies experienced similar challenges with net interest margin after losses (NIMAL) in their lending portfolios. PicPay saw a significant drop in NIMAL for financial services from R$188 million in the third quarter of 2024 to R$36 million in the fourth quarter. MercadoLibre has faced its own pressures in NIMAL, but the similar trend observed at PicPay suggests that this is a broader market issue, especially among those expanding credit card operations, rather than a problem unique to MercadoLibre. Despite these challenges, InvestingPro data shows MercadoLibre maintains strong cash flows and operates with a moderate level of debt, demonstrating resilient financial management. Six analysts have recently revised their earnings expectations upward for the upcoming period.
In other recent news, MercadoLibre has announced plans to significantly boost its investment and workforce in Mexico by 2025, aiming to hire an additional 10,000 employees. This move represents a 38% increase in investment compared to the previous year and is part of the company’s strategy to enhance its technological, logistical, and financial ecosystems. In a series of analyst updates, Jefferies raised its price target for MercadoLibre shares to $2,450, maintaining a Buy rating, based on a positive outlook on future earnings driven by operational leverage and an increased commerce take rate. Raymond (NSE:RYMD) James also increased its price target to $2,650, citing improved fintech profitability and strong fourth-quarter earnings. Cantor Fitzgerald made a notable adjustment, raising its price target to $3,000 following impressive fourth-quarter results that showed substantial growth in Gross Merchandise Volume and margin expansion. BTIG analysts raised their price target to $2,500, highlighting MercadoLibre’s strong earnings per share performance, particularly in the e-commerce segment in Brazil and credit performance in the fintech sector. These recent developments underscore the company’s robust financial performance and strategic initiatives to expand its market presence.
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