On Tuesday, Jefferies maintained a Buy rating on MercadoLibre (NASDAQ: NASDAQ:MELI) and raised the stock's price target to $2,250 from $2,100. The adjustment follows the company's robust second-quarter performance, which prompted the firm to increase its full-year 2024 financial estimates.
The revised price target reflects a positive outlook based on MercadoLibre's recent earnings. The firm's analysis led to an approximate 4% increase in the net revenue forecast for FY24 and an enhancement of 7-9% in projections for EBIT, EBITDA, and EPS levels. These adjustments are based on the company's strong quarterly results announced earlier in August.
Despite the optimistic revisions for FY24, the firm's expectations beyond that year are moderated by currency-related assumptions. It is anticipated that the Brazilian Real (BRL) and the Mexican Peso (MXN) will be roughly 7% weaker than previously expected from 2025 onwards, which has been factored into the forecast.
The increased price target to $2,250 from $2,100 is attributed to marginally higher earnings and free cash flow (FCF) estimates. The firm's decision to reiterate the Buy rating on MercadoLibre stock underscores confidence in the company's financial trajectory following its second-quarter performance.
In other recent news, MercadoLibre has been making waves with its financial performance and market growth. The company's earnings and revenue results have been impressive, with a 40% year-over-year increase in revenues, amounting to $5.1 billion in the second quarter of 2024. The net income margin also shot up to a remarkable 10.5%, the highest in eight years.
Focusing on analyst updates, BTIG has raised its price target for MercadoLibre to $2,250, maintaining a Buy rating. This upgrade comes in light of the company's significant growth in Brazil, where it achieved a 36% increase in gross merchandise volume, outpacing the rest of the market.
In other company news, MercadoLibre issued 1.6 million new credit cards during the same quarter, and its Fintech Services saw a surge in monthly active users, surpassing 50 million. Despite a contraction in EBIT margins due to bad debt provisioning, the company reported market share gains in Brazil and Mexico, and positive results from its credit card business and AI implementation in advertising.
InvestingPro Insights
Following Jefferies' optimistic outlook on MercadoLibre, InvestingPro data provides additional context to the company's financial health and market performance. With a market capitalization of $103.66 billion and a notable gross profit margin of 54.7% for the last twelve months as of Q2 2024, MercadoLibre demonstrates a strong foothold in terms of revenue and profitability. The company's revenue growth is also impressive, showing a 37.27% increase over the last twelve months, which aligns with the positive revisions made by Jefferies.
InvestingPro Tips highlight MercadoLibre's financial prudence, with the company holding more cash than debt, and analysts have revised their earnings upwards for the upcoming period, indicating potential for continued financial success. Furthermore, MercadoLibre's stock has experienced a high return over the last year, with a 61.95% price total return, showcasing investor confidence and market momentum. For those interested in a deeper analysis, InvestingPro offers additional tips, revealing MercadoLibre as a prominent player in the Broadline Retail industry with strong returns over various time frames.
With the next earnings date slated for October 31, 2024, investors will be keen to see if MercadoLibre can sustain its growth trajectory and live up to the bullish sentiment. For a more comprehensive set of insights, including 18 additional InvestingPro Tips, interested parties can visit https://www.investing.com/pro/MELI.
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