BTIG Likes MercadoLibre's Prospects In Brazil

The fintech industry is booming in Latin America, and one analyst sees a winner in Mercadolibre Inc MELI.

The Rating

BTIG analyst Marvin Fong maintained a Buy rating on MercadoLibre and raised his price target from $395 to $410.

The Thesis

By BTIG’s assessment, the fintech company continues to dominate its target markets.

“4Q app metrics we tracked indicate Mercado Pago sustained its strong competitive position in LatAm payments,” Fong wrote in a note.

In Mexico, it trails only behind Banco Bilbao Vizcaya Argentaria SA BBVA. In Argentina and Brazil, it boasted the largest daily-active-user (DAU) count and the highest DAU growth rate of any digital wallet fintech company.

Management bolstered its Brazil growth by launching an asset management service last month, and Fong anticipates near-term roll outs of salary accounts, a credit card and conversion between credit order documents and electronic transfers.

“In Brazil, we believe Mercado Pago is rapidly evolving from a payment app to a full-fledged digital bank. This evolution should be accretive to shareholder value given the huge opportunity – 55 percent of Brazil’s populace is unbanked,” Fong wrote.

MercadoLibre’s prominence will not persist without effort, though. The firm faces 1,200 fintech competitors in Latin America, and BTIG senses particular threat from AME Digital.

“Despite the competition, we see a very bright future for Mercado Pago with multiple growth catalysts likely in 2019,” Fong wrote.

Price Action

At time of publication, shares traded up 5 percent at $507.59.

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