Mercado Livre (MELI) has recently received positive news from financial firm BTG Pactual, which has revised its stock price target for the company from $2,291 to $2,619. Following this upgrade, Mercado Livre's Brazilian Depositary Receipts (BDRs), MELI34, saw an increase of 1.36%, trading at R$ 104.72 as of 12:34 PM (local time). This news follows the bank's continued recommendation for Mercado Livre stocks as a 'buy', projecting a price appreciation of 17%.
Analysts at BTG Pactual, including Luiz Guanais, Gabriel Disselli, and Pedro Lima, cited promising signs for the company, particularly noting the margins for credit growth—especially through credit cards—and the relatively mild competitive outlook within Latin America’s e-commerce sector. The analysts stated, "The margin for credit growth (especially through credit cards) and the competitive outlook still looks promising in LatAm e-commerce." This reflects Mercado Livre's fruitful strategy, which emphasizes credit expansion and improving user experience.
Recently, Mercado Livre reported its financial results for the fourth quarter of 2024 on October 20. The company achieved impressive growth of 287.2% compared to the same quarter last year, posting net earnings of $639 million. This remarkable performance was driven by strategic investments aimed at enhancing user experience, broadening its product offerings, and bolstering its logistical infrastructure.
Despite the bullish forecasts, BTG highlights the current valuation of Mercado Livre at 45 times the anticipated earnings per share (P/E) for 2025. Although the valuation may not be considered cheap, the analysts believe the sustainable growth and strong profitability keep the stock attractive. They remarked on Mercado Livre’s resilient performance across Latin America, pointing especially to its operations in Argentina. "Despite fiscal challenges and the depreciation of the Argentine peso, Mercado Livre managed to balance these negatives with gains on other fronts," they explained.
Particularly notable is Mercado Livre's dominance within Brazil, which remains its largest market, alongside significant operations in Mexico and Argentina. Analysts report growth rates of 32% for Brazil and 28% for Mexico, showcasing the company’s extensive reach and adaptability even amid regional challenges.
Looking forward, BTG Pactual suggests the earnings per share (EPS) growth for Mercado Livre is likely to rise by approximately 29% annually from 2024 to 2028. This projection positions Mercado Livre as not only resilient but also as one of the top picks among investors focusing on the Latin American tech and e-commerce space.
With the firm backing from BTG Pactual, Mercado Livre appears poised for continued expansion, driven by its strategic initiatives and the promising economic outlook for the e-commerce industry across Latin America.