MercadoLibre has 'multiple sources of earnings upside'

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MercadoLibre has 'multiple sources of earnings upside' - Morgan Stanley

Published Mar 31, 2023 14:34

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MercadoLibre has 'multiple sources of earnings upside' - Morgan Stanley

MELI

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By Sam Boughedda

Morgan Stanley lifted its price target on MercadoLibre (NASDAQ:MELI) to $1,770 from $1,620, reiterating an Overweight rating on the stock and maintaining it as a top pick.

In a research piece, Morgan Stanley analysts said there are multiple sources of earnings upside for MercardoLibre, and the company's Commerce and Fintech ecosystem "continues to broaden."

"Our analysis shows that EBIT economics are not driven by just one business line — supporting the durability of MELI's profitable growth outlook," Morgan Stanley said. "In our 2027E build, we see core marketplace, credit, and first-party merchandise sales as the largest revenue contributors, but with no single line accounting for more than 25% of the mix."

The analysts add that the diversification further increases when considering MELI's operations are spread across the LatAm region.

"We see a similar breadth of drivers on the EBIT side, with advertising and financing/prepayment fees among areas that over-index for EBIT contribution relative to revenue," they added.

Elsewhere on Friday, BTIG analysts maintained a Buy rating and $1,400 price target on MELI, telling investors in a note that they are raising estimates as consumer spending improves and "Americanas' woes turn out even worse than expected."

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