5 big analyst AI moves: Apple lifted to Buy, AI chip bets reassessed
Investing.com - UBS has reiterated its Buy rating and $3,000.00 price target on MercadoLibre (NASDAQ:MELI), despite the stock’s approximately 20% decline following changes to its free-shipping policy. Currently trading at $2,142.05, MELI maintains a strong "Buy" consensus among analysts, with targets ranging from $2,170 to $3,500. According to InvestingPro analysis, the stock shows impressive gross profit margins of 51.5%.
The decline reflects market concerns about potential margin pressure from both the free-shipping policy changes and high investment levels in the platform, according to UBS. Additional factors include intensified competition, with rivals like Shopee and Amazon Brazil announcing new promotions and benefits, along with potential headwinds from Argentina’s foreign exchange and macroeconomic volatility. Despite these challenges, InvestingPro data reveals MercadoLibre’s robust financial health, with revenue growing 35.8% and maintaining healthy cash flows to cover interest payments. Get access to 12 more exclusive ProTips and comprehensive analysis with InvestingPro.
UBS views the upcoming third-quarter results as an important catalyst for the stock, providing better visibility on how these trends affect both margins and growth. While acknowledging margin pressure, UBS believes the stock’s underperformance versus peers already reflects consensus expectations of approximately 160 basis points quarter-over-quarter margin decline.
The investment firm anticipates positive trends in Brazilian GMV growth acceleration and solid performance in MercadoLibre’s fintech business. These factors support maintaining the Buy rating despite near-term challenges.
MercadoLibre is currently trading at 33 times projected 2026 earnings, which UBS notes is 20% below its one-year historical level and carries only about a 10% premium compared to selected peers.
In other recent news, MercadoLibre has been the focus of several analyst evaluations and regulatory developments. Benchmark has maintained its Buy rating for MercadoLibre, setting a price target of $2,875.00, while Cantor Fitzgerald has raised its price target to $2,900.00, citing a positive growth outlook. These assessments come amid concerns over margin expansion and macroeconomic factors affecting the company’s performance. Meanwhile, Revolut Ltd has received approval from Mexico’s financial regulator to operate as a bank, increasing competition with MercadoLibre in the Latin American market. Additionally, Mexico’s anti-trust watchdog, Cofece, identified competition barriers faced by sellers on platforms like MercadoLibre and Amazon, although no fines were imposed. The investigation highlighted issues with transparency and visibility for sellers using these platforms. These developments underscore the dynamic and competitive environment in which MercadoLibre operates.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.