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Stifel Upgrades Latin American E-Commerce Platform Mercadolibre After 'Transitional' Q2

Stifel Upgrades Latin American E-Commerce Platform Mercadolibre After 'Transitional' Q2

Latin American e-commerce and payment company Mercadolibre Inc (NASDAQ: MELI) fell short on multiple metrics in its second-quarter report, but the worst is now behind it, according to Stifel.

The Analyst

Stifel's Scott Devitt upgraded Mercadolibre from Hold to Buy with an unchanged $380 price target.

The Thesis

Mercadolibre's Q2 print was mixed, with gross merchandise volume and revenue coming in better than expected, Devitt said in the upgrade note. The company posted an EBIT margin miss due to multiple headwinds, including currency woes, a trucking strike and reduced shipping subsidiaries, the analyst said. (See Devitt's track record here.) 

Factors external to the company have impacted the stock since the Aug. 8 report, including trade-related issues in Turkey and China, Brazil's upcoming election and convertible offerings, Devitt said. 

The headwinds that impacted the company's earnings report are not much of an ongoing concern given the secular tailwinds in the e-commerce and digital payments space along with management's strong execution, the analyst said.

Mercadolibre is in a position of strength to continue adding market share and improve its monetization through greater payments adoption and new merchant services like financing and credit, which are still in their early stages, according to Stifel. 

Mercadolibre's Q2 was a "transitional" quarter pressured by multiple headwinds that have likely passed, Devitt said. Investors may want to consider taking advantage of the recent weakness in the shares as an opportunity for long-term investors who want exposure to a leading e-commerce and payments player in Latin America.

Price Action

Mercadolibre shares were trading up 3.52 percent to $340 at the time of publication Wednesday. 

Related Links:

MercadoLibre's Valuation Is Too Compelling To Pass Up, KeyBanc Says In Upgrade

MercadoLibre Downgraded On $53M Hit From Higher Brazilian Shipping Costs

Photo courtesy of Mercadolibre. 

Latest Ratings for MELI

Apr 2021Wolfe ResearchInitiates Coverage OnOutperform
Mar 2021BTIGUpgradesNeutralBuy
Mar 2021JP MorganMaintainsOverweight

View More Analyst Ratings for MELI
View the Latest Analyst Ratings


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