On Friday, BTIG updated its outlook on MercadoLibre (NASDAQ:MELI) shares, raising the price target to $2,025 from $1,885 while reiterating a Buy rating on the stock.
The adjustment followed a robust second-quarter performance by the e-commerce giant, which saw a significant increase in items sold and gross merchandise volume (GMV).
MercadoLibre recorded a 29% year-over-year growth in items sold, the fastest in over three years, resulting in a GMV of $12.7 billion. This figure surpassed the consensus estimate of $11.8 billion.
Growth was widespread across key markets, with local currency GMV rising by 36% in Brazil, 30% in Mexico, and an impressive 252% in Argentina.
The company's performance in Brazil was particularly notable, considering MercadoLibre's already substantial market share of approximately 40%. Additionally, the quarter witnessed a rise in unique buyers by 3.1 million, marking the largest non-holiday quarter growth since the pandemic. The average number of items per buyer also reached a new non-holiday record of 7.4.
MercadoLibre's fintech segment also showed strong results, with a total payment volume (TPV) of $46.3 billion, exceeding expectations. The fintech take-rate saw a quarterly increase, and the company experienced a gross margin expansion from credit and fintech funding activities.
These positive outcomes contributed to a revenue of $5.1 billion, comfortably beating the Street's forecast of $4.6 billion and BTIG's projection of $4.7 billion.
The adjusted EBITDA for the quarter came in at $880 million, surpassing both the Street's estimate of $812 million and BTIG's prediction of $769 million.
Despite the positive figures, the firm anticipates that foreign exchange fluctuations will impact future quarters, as major Latin American currencies have recently weakened against the dollar.
BTIG forecasts a sequential decline in GMV to $12.4 billion for the upcoming quarter, which still stands above the Street's expectation of $11.8 billion. However, even with increased growth estimates, BTIG maintains its fiscal year 2025 EBITDA estimate of $4.0 billion.
The raised price target to $2,025 reflects the firm's confidence in MercadoLibre's stronger organic growth outlook, warranting a higher target multiple.
In other recent news, Latin American e-commerce leader, MercadoLibre, recorded robust growth in both revenue and net profit for the second quarter. The company reported a net profit of $531 million, surpassing the anticipated $432 million by analysts at LSEG.
Revenue also exceeded expectations, with the company generating $5.1 billion, a 42% increase from the previous year, outperforming the projected $4.68 billion.
BTIG recently confirmed its Buy rating on MercadoLibre, maintaining a steady price target of $1,885. This endorsement followed a Knowledge Leader call that discussed the company's strong positioning within the fintech and e-commerce sectors in key markets like Brazil, Mexico, and Argentina.
Despite potential challenges from emerging technologies and competitors, MercadoLibre's growth outlook remains positive according to BTIG.
In the first quarter of 2024, MercadoLibre reported a 30% year-on-year growth in Gross Merchandise Volume (GMV) in Brazil and Mexico. The company's advertising business achieved regular levels of GMV penetration, and its financial services arm, Mercado Pago, demonstrated solid growth.
These recent developments underscore MercadoLibre's ability to navigate diverse economic landscapes and signal its continued growth potential in the evolving Latin American market.
InvestingPro Insights
As MercadoLibre continues to demonstrate strong performance, with impressive growth in items sold and GMV, it's worth noting key financial metrics and market sentiment provided by InvestingPro. The company holds a market capitalization of $81.42 billion and boasts a robust gross profit margin of 56.49% over the last twelve months as of Q1 2024. This underlines MercadoLibre's ability to efficiently manage its cost of goods sold and maintain profitability.
InvestingPro Tips indicate that MercadoLibre has an impressive gross profit margin and is trading at a low P/E ratio relative to near-term earnings growth, with a P/E ratio currently at 70.71. These factors suggest that the company is managing its finances well and may be positioned for future growth. Additionally, analysts predict the company will be profitable this year, which is consistent with the positive outlook presented by BTIG.
For investors seeking more in-depth analysis, there are over 10 additional InvestingPro Tips available for MercadoLibre at InvestingPro, offering further insights into the company's financial health and market position.
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