MercadoLibre attracts Outperform rating from Wedbush Securities
Leila Melhado/iStock Editorial via Getty Images
Wedbush Securities started off coverage on MercadoLibre (NASDAQ:MELI) on Tuesday with an Outperform rating and a price target of $1,500. The PT represents 25% upside potential for the e-commerce stock.
Analyst Scott Devitt and team noted that MercadoLibre (MELI) is the leading e-commerce platform in Latin America, with the largest market share of online retail in its three key markets of Brazil, Argentina, and Mexico. MercadoLibre (MELI) was also observed to be operating a scaled digital financial services business that is on pace to process over $172B in payments volume this year.
"MercadoLibre has built a strong logistics footprint that is currently fulfilling ~70% of deliveries in Mexico with adoption rising in other markets. The combination of rising fulfillment adoption and the layering in of advertising revenue (ad revenue is equal to ~1.6% of GMV, on the path to 5%) is driving take rate expansion as the company continues to further monetize merchants on its marketplace."
While MercadoLibreâs consolidated take rate is below the peer average at approximately 15.6% of GMV, Wedbush sees a clear path to deeper monetization over time driven by fulfillment adoption, advertising growth, and scale. A positive factor called out on the stock was that e-commerce and digital payments growth in the region are relatively early in the adoption cycle, and online retail sales in LATAM are expected to compound at a 12% annual growth rate over the next four years. The combination of rising take rates and continued e-commerce growth in the low to mid-teens gives the firm conviction in MELI's growth trajectory. That all adds up to a forecast from Wedbush for MELI revenue to growth at a 17% CAGR through 2027 and see margin expansion along the way.
Shares of MercadoLibre (MELI) rose 0.85% in premarket trading to $1,239.00 vs. the 52-week range of $754.76 to $1,388.39.

More on MercadoLibre

MercadoLibre: Leadership Position In Commerce And Fintech
MercadoLibre: A Deep Dive Into Latin America's E-Commerce Giant
MercadoLibre: The Bullish Thesis Is Unchanged - Don't Fear Argentina
MercadoLibre slumps as BofA says Brazil tax rule set to bite