Nucor earnings beat by $0.08, revenue fell short of estimates
On Friday, BTIG analysts adjusted their outlook on MercadoLibre (NASDAQ:MELI) shares, raising the price target to $2,500 from the previous $2,200 while maintaining a Buy rating. The stock, currently trading at $2,110.47, is near its 52-week high of $2,161.73 and has delivered an impressive 24.11% return year-to-date. The firm’s decision follows MercadoLibre’s impressive fourth-quarter performance, which saw earnings per share (EPS) significantly exceed expectations. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.36, reflecting its strong market position.
MercadoLibre reported EPS of $12.61, which was 60% higher than the consensus estimate of $7.90 and BTIG’s own estimate of $8.09. The company’s e-commerce segment in Brazil saw Gross Merchandise Volume (GMV) increase by 32%, surpassing BTIG’s estimate of 28%. Additionally, in Argentina, units sold grew by 18%. This growth contributed to the company’s robust revenue growth of 43.56% over the last twelve months, with total revenue reaching $20.78 billion. For deeper insights into MercadoLibre’s performance metrics and growth trajectory, investors can access the comprehensive Pro Research Report available on InvestingPro.
The fintech aspect of MercadoLibre’s business also showed promising signs, particularly in credit performance, which remained robust despite a tightening interest rate environment. Notably, first payment defaults in Brazil hit record lows in December. The company has been actively expanding into the credit card sector, issuing 5.9 million cards in 2024.
MercadoLibre’s Net Interest Margin After Loss (NIMAL) improved sequentially in the fourth quarter, reaching 27.6% from 24.2% in the third quarter. This improvement was partly attributed to the extra pay period in the fourth quarter, customary in many Latin American countries. Analysts at BTIG believe that without this extra pay period, NIMAL would have likely decreased. However, credit trends remain strong, with older cohorts being NIMAL-positive and newer cohorts following a similar positive trajectory.
The rate of credit card penetration is beginning to slow, with credit cards increasing their share of the loan portfolio by 110 basis points in the fourth quarter, compared to 150 basis points in the third quarter and 290 basis points in the second quarter. BTIG analysts expect that if this trend continues, NIMAL could reach a low point this year as the profits from mature cohorts begin to outweigh the dilution from newer ones.
Additionally, MercadoLibre benefited from a favorable tax rate during the quarter, which contributed $1.80/share to EPS, relative to BTIG’s 28% tax rate assumption. Even accounting for one-off items such as the extra pay period and tax rate, the quarter’s profitability was deemed excellent by BTIG. Operating expenses, excluding bad debt expense, were 130 basis points lower than modeled, and adjusted EBITDA was estimated to exceed the Street consensus of $762 million by over $100 million.
In light of these results and the firm’s updated estimates, BTIG has applied a target 35x P/E multiple, leading to the new $2,500 price target for MercadoLibre stock. The company currently trades at a P/E ratio of 74.15 and commands a market capitalization of $106.92 billion. Based on InvestingPro’s Fair Value calculations, the stock appears to be fairly valued at current levels. InvestingPro subscribers have access to 14 additional key insights about MercadoLibre, including detailed valuation metrics and growth indicators that can help inform investment decisions.
In other recent news, MercadoLibre reported its financial results for the fourth quarter and full year ending December 31, 2024. The detailed financial statements, though not filed with the SEC, were made available to investors on the company’s website. In terms of analyst actions, Citi maintained a Buy rating on MercadoLibre, with a price target of $2,250. This decision was influenced by improvements in the company’s credit portfolio, including a decrease in delinquency rates and growth in credit operations. Conversely, JPMorgan adjusted its price target for MercadoLibre from $2,150 to $1,950, maintaining a Neutral rating. The revision was attributed to lower foreign exchange expectations in Brazil and the impact of a Black Friday campaign. JPMorgan also cited higher capital costs and reduced its earnings estimates for 2025 and 2026. These developments reflect varied analyst perspectives on MercadoLibre’s financial outlook and strategic execution.
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