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On Friday, Raymond (NSE:RYMD) James analyst Josh Beck increased the price target for MercadoLibre (NASDAQ: NASDAQ:MELI) shares to $2,650 from the previous $2,250, while reiterating a Strong Buy rating. The stock, currently trading near its 52-week high with a market capitalization of $114.49 billion, has demonstrated remarkable momentum with a 24% gain year-to-date. Beck highlighted the company’s fourth-quarter report, which underscored the positive aspects of a recent upgrade based on improved fintech profitability and diminishing fulfillment challenges. According to InvestingPro, the company maintains strong financial health with an overall score of "GREAT."
The analyst praised MercadoLibre’s performance, noting that the company’s earnings before interest and taxes (EBIT) of $820 million surpassed the Street’s estimate of $615 million. This was attributed to provisions that were approximately $100 million below their estimates. The report also showed a robust foreign exchange-neutral (FXN) gross merchandise volume (GMV) of $20.9 billion and credit card revenue of $3.6 billion. The company’s impressive 43.56% revenue growth in the last twelve months reflects its strong market position. For deeper insights into MercadoLibre’s financial metrics and 14+ additional ProTips, consider accessing the comprehensive research available on InvestingPro.
Beck provided a recap of the macroeconomic commentary included in the report, pointing out the stable conditions in Brazil and Mexico, while Argentina is showing signs of recovery. MercadoLibre’s EBIT performance was particularly noteworthy, as it came in ahead of investor expectations, especially after a miss in the previous quarter. The company’s strong execution is reflected in its robust financial metrics, including a healthy current ratio of 1.21 and substantial free cash flow generation.
In the update, Beck detailed adjustments to the revenue projections for MercadoLibre’s commerce segment, with FXN GMV projections for 2025 and 2026 remaining similar to previous estimates but with slight modifications based on regional economic trends. The analyst also mentioned a modest increase in the expected revenue take rate.
For the fintech segment, the revenue expectations were adjusted downward, mainly due to a projected slowdown in card growth, particularly in Brazil. However, the consolidated revenue forecast was lowered primarily due to the fintech segment, while the EBIT estimate for 2025 was increased slightly to around $3 billion, reflecting the strong performance in the fourth quarter. The 2026 EBIT forecast was slightly reduced due to the anticipated lower top line. Trading at a P/E ratio of 81.38, MercadoLibre’s valuation reflects high growth expectations. Get exclusive access to detailed valuation metrics and a comprehensive Pro Research Report through InvestingPro.
In other recent news, MercadoLibre reported impressive fourth-quarter earnings, surpassing analysts’ expectations in revenue and EBIT. The company experienced a 56% increase in Gross Merchandise Volume (GMV), adjusted for foreign exchange impacts, and a 27% rise in units sold. Cantor Fitzgerald responded by raising its price target for MercadoLibre stock to $3,000, citing a strong fundamental outlook and a healthy demand environment for e-commerce and fintech services. BTIG also increased its price target to $2,500, following MercadoLibre’s earnings per share (EPS) of $12.61, which was significantly above the consensus estimate.
In Brazil, MercadoLibre’s GMV grew by 32%, while Argentina saw an 18% increase in units sold. The company’s fintech segment showed robust credit performance, with record low first payment defaults in Brazil. Citi maintained a Buy rating with a $2,250 target, highlighting improvements in MercadoLibre’s credit portfolio and reduced delinquency rates. Meanwhile, JPMorgan adjusted its price target to $1,950, citing challenges related to foreign exchange expectations and increased capital costs in Brazil. Despite maintaining a Neutral rating, JPMorgan noted a cautious outlook compared to other tech stocks.
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