MercadoLibre stock gains after crushing profit estimates, 'continues to shine' say analysts

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By Senad Karaahmetovic 

MercadoLibre (NASDAQ:MELI) shares are moving higher in pre-open Friday trading after the South American e-commerce business reported better-than-expected profit figures for the fourth quarter. MELI stock is up almost 4% in pre-market Friday.

MELI posted Q4 EPS of $3.25 to crush the average analyst estimate of $2.46. Revenue soared 41% year-over-year to $3 billion, beating the $2.96B consensus. Argentina and Mexico revenues increased by 50% and 55%, respectively.

Meli reported 97 million active users at the end of the quarter, an increase of 18% YoY. Gross merchandise volume (GMV) jumped 21% to $9.62B.

"Over the last 12 months, we have processed more than $100bn in payments, booked over $10bn of net revenues, shipped more than 1bn items through Mercado Envios, and surpassed $1bn of Income from operations, all for the first time in our history. These major milestones confirm a successful and transformational multi year period for MercadoLibre," the company said in a shareholder letter.

Barclays analysts increased the price target on MELI stock to $1475 from $1250 as the business "continues to shine."

"A lot to like on the print and as we look to 2023, and while our concerns around inflationary pressures, interest rates, and macro/geopolitical risks remain, we’re increasingly confident that MELI will put up outsized results this year vs the rest of our e-commerce coverage," the analysts wrote in a note.

Morgan Stanley analysts said MELI's results "defied the recent-year trend of negative Q4 seasonality."

"With constructive drivers across GMV growth, ad monetization, and credit profitability, among other areas, we see operating momentum into '23 and reiterate OW," the analysts said to clients.