MercadoLibre stock price target lowered by Citi on margin pressure

Investing.com - Citi has lowered its price target on MercadoLibre (NASDAQ:MELI) to $2,900 from $3,000 while maintaining a Buy rating, citing expected margin pressure in the second quarter. According to InvestingPro data, the stock currently trades at $2,351, with analyst targets ranging from $1,868 to $3,200, reflecting mixed sentiment about the company’s near-term prospects.

The bank opened a 30-day downside Catalyst Watch on the Latin American e-commerce giant, expressing caution about multiple investments concentrated in June that could pressure EBIT margins. These investments include a new lower free shipping threshold in Brazil (reduced from R$79+ to R$19+), lower shipping fees for sellers, and various marketing and promotional events.

Citi’s EBIT estimate for Q2 2025 is 6% below consensus, with the firm expecting MercadoLibre to report quarterly results on August 4 after market close. The analyst anticipates consensus earnings revisions, with Citi’s estimates 5%, 2%, and 3% below consensus for 2025, 2026, and 2027 respectively.

Despite near-term margin concerns, Citi remains confident in MercadoLibre’s ability to sustain top-line growth and gain market share. The bank’s revenue estimates are approximately 3-4% above consensus for 2025 and 2026.

Citi believes that while competition has intensified, competitors cannot match MercadoLibre’s unique fintech integration, even if they improve user experience in other areas such as delivery time and pricing.

In other recent news, MercadoLibre reported significant developments that are drawing attention from investors. S&P Global Ratings upgraded the company to investment grade, citing its strong operating and financial performance, with notable growth in its marketplace and fintech revenue. The company has seen a substantial increase in gross merchandise volume and total payment volume, with projections indicating continued revenue growth in the coming years. Shareholders of MercadoLibre also approved all proposals at the recent Annual Meeting, including the election of directors and the ratification of the company’s independent accounting firm.

Analysts have been active in reassessing MercadoLibre’s stock. Cantor Fitzgerald lowered its price target to $2,700 due to concerns over shipping costs but maintained an Overweight rating. Meanwhile, BofA Securities reaffirmed a Buy rating with a $3,000 price target, acknowledging potential impacts from changes in shipping policies in Brazil but highlighting opportunities in advertising and earnings growth. Conversely, Jefferies downgraded the stock from Buy to Hold, despite raising the price target to $2,800, citing a need to reassess MercadoLibre’s market position after a strong performance in 2023. These developments reflect the dynamic landscape in which MercadoLibre operates, with analysts weighing the company’s strengths against current market conditions.

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