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On Wednesday, Citi analyst Tobias Stingelin confirmed a Buy rating on MercadoLibre (NASDAQ:MELI) shares with a consistent price target of $2,250.00. The endorsement comes after a detailed examination of Mercado Pago’s Financial Investment Funds (FIDC) portfolio, as disclosed to the Brazilian Securities Commission (CVM). This portfolio serves as an indicator of the company’s broader credit operations, which include Mercado Credito and its Brazilian segments. The prominent player in Broadline Retail, currently valued at $104.89 billion, has demonstrated impressive growth with revenue increasing 35% over the last twelve months. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with 15+ additional insights available to subscribers.
The credit portfolio for MercadoLibre reached R$6.98 billion in January, marking an increase of 1.9% month-over-month and a significant 17.7% year-over-year growth. The improvement in credit quality was highlighted by a decrease in delinquency rates, with non-performing loans (NPLs) over 90 days dropping 20 basis points month-over-month to 24.5%. This reduction in delinquency rates is notable as it represents the first monthly decline since October, reversing a trend where delinquency peaked at 24.7% in December after a low of 21.3% in September.
Stingelin’s analysis suggests that MercadoLibre is effectively expanding its credit book, which includes both merchants and consumers, while maintaining a rapid pace of credit card origination. The control over credit quality was underscored as a positive sign, indicating that the company’s credit offerings are likely to continue being a driving force for Gross Merchandise Volume (GMV) growth.
The analyst’s commentary reinforces confidence in MercadoLibre’s strategy and its execution within the credit market, especially in Brazil. As such, the Citi analyst’s reiteration of the Buy rating and the $2,250 price target reflects an optimistic outlook for the company’s financial services and their contribution to overall business growth. The stock has demonstrated strong momentum, with a 23.42% return year-to-date, though InvestingPro indicates it may be in overbought territory based on technical indicators.
In other recent news, JPMorgan analyst Marcelo Santos revised the price target for MercadoLibre from $2,150.00 to $1,950.00. Despite this adjustment, the firm maintained its Neutral stance on the company’s shares. The revision was influenced by several factors, including lower foreign exchange expectations in Brazil and the impact of an aggressive Black Friday campaign. Higher costs of capital were also cited as contributing to the revised outlook. These elements led to a reduction in JPMorgan’s estimates for MercadoLibre’s earnings before interest and taxes for 2025 and 2026 by 9% and 4%, respectively. Similarly, projections for the company’s earnings for the same periods were adjusted down by 8% and 3%. The new price target suggests a modest 8% potential upside from current levels, according to JPMorgan. The firm also noted that its expectations for MercadoLibre’s 2025 and 2026 metrics remain below the consensus.
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