Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Thursday, BTIG analyst Marvin Fong updated the price target for MercadoLibre (NASDAQ:MELI) stock to $2,750 from $2,500, while maintaining a Buy rating. Currently trading near its 52-week high of $2,374.54, the company has earned a "GREAT" financial health score according to InvestingPro analysis. The revision reflects the company’s impressive quarterly performance, particularly in the fintech sector. MercadoLibre’s Total (EPA:TTEF) Payment Volume (TPV) exceeded expectations, and its credit division, Mercado Crédito, showcased significant growth and quality, especially in Argentina.
Argentina emerged as a highlight with a 52% year-over-year increase in items sold and a 119% growth in fintech revenue in USD. The credit portfolio expanded by $1.2 billion, or 18%, reaching $7.8 billion, with Brazil contributing two-thirds of this growth. This expansion aligns with the company’s impressive 37.53% year-over-year revenue growth and industry-leading gross profit margin of 52.67%. Despite a lower-than-anticipated Net Interest Margin After Loss (NIMAL) of 22.7%, the company reported a bad debt expense that was $31 million better than projected.
The payments sector was another strong point for MercadoLibre, with a TPV of $58.3 billion, surpassing the expected $53.5 billion. This success was partly due to new recurring payment products in Argentina and a general economic recovery in the country. E-commerce also performed well, with Gross Merchandise Volume (GMV) totaling $13.3 billion against a consensus of $13.1 billion. For deeper insights into MercadoLibre’s financial metrics and growth trajectory, InvestingPro subscribers can access comprehensive Pro Research Reports with expert analysis and actionable intelligence.
However, Mexico did not meet expectations, with GMV growth at 23%, below the anticipated 25%, primarily due to underperformance in the tech category. Nonetheless, MercadoLibre has seen success in addressing these challenges. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) were notably strong, with a reported $935 million, which was significantly higher than the Street’s estimate of $769 million.
In anticipation of continued business momentum, BTIG has increased its forecasts for FY25E, expecting GMV to reach $62.9 billion and TPV to hit $273.9 billion, up from previous estimates of $59.8 billion and $262.0 billion, respectively. With current EBITDA at $3.248 billion and a market capitalization of $114.68 billion, the company trades at a P/E ratio of 59.14x. Adjusted EBITDA/EPS for FY25E is now projected at $4.6 billion and $52.08, up from the prior $4.2 billion and $48.27. The price target increase to $2,750 is justified by a higher target P/E ratio of 38x, up from 36x, to capture the significant improvements in Argentina and the potential for 30-40% annualized EPS growth over the next five years.
In other recent news, MercadoLibre has announced a significant investment of $5.8 billion in Brazil, aiming to create approximately 14,000 jobs. This investment marks a 47.8% increase from the previous year and highlights the company’s focus on expanding its logistics, technology, and fintech operations in its primary market. Meanwhile, BTIG analysts have maintained a Buy rating with a $2,500 price target on MercadoLibre’s stock, citing the company’s robust performance in the fintech sector, particularly a 76% increase in total payment volume during the fourth quarter of 2024.
Cantor Fitzgerald also adjusted its price target for MercadoLibre, reducing it to $2,400 from $3,000, while maintaining an Overweight rating. The firm’s projections for the first quarter of 2025 include a Gross Merchandise Volume of $13.6 billion and Total Payment Volume of $50.6 billion. Benchmark analysts have initiated coverage with a Buy rating and a $2,500 target, emphasizing MercadoLibre’s growth potential in Latin America’s low online retail penetration market.
The company’s strategic initiatives and market positioning have also been supported by BTIG, which highlighted strong retail spending trends in Brazil and stable credit quality indicators. These developments reflect MercadoLibre’s ongoing commitment to leveraging growth opportunities across Latin America, with analysts maintaining a positive outlook on the company’s future performance.
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