Shares of MercadoLibre were given a new street level target by Investing.com

MercadoLibre (NASDAQ: ) shares have won renewed confidence from Wall Street, with firms such as Morgan Stanley and Bank of America raising their price targets to new highs on the Street.

Analysts at Morgan Stanley noted that the stock is currently trading near its all-time highs, however, they see further growth driven by four key catalysts related to gross merchandise value (GMV), advertising, credit and Argentina.

The bank raised its price target on the stock from $2,175 to $2,500, implying an upside of more than 18% from current levels.

MELI shares rose more than 1 percent in premarket trading on Friday.

The investment firm highlighted MercadoLibre’s GMV growth, particularly in Brazil, where the company posted 33% growth in the first half of 2024, beating competitors such as Magazine Luiza and Casas Bahia.

The performance is attributed to MercadoLibre’s investments in logistics, fintech and platform improvements, which are believed to be key drivers of digital commerce change in Latin America.

Projections suggest that industry growth rates for Brazil and Mexico could converge with MercadoLibre’s GMV growth rates, potentially indicating a conservative earnings-share deceleration, particularly in Brazil.

The firm also sees a growth track for Mercado Ads, MercadoLibre’s advertising business. Given that advertising revenue is a small part of consolidated GMV last year, there is significant room for expansion. The partnership with Disney, where MercadoLibre will run ads within Disney+, is seen as a positive development.

MercadoLibre’s loan portfolio, Mercado Credito, is another area of ​​expansion, with new products and entry into new markets such as Mexico.

Despite a slowdown in growth in 2023, the portfolio saw a rebound in the first half of 2024. The company’s ambitions in Mexico, including applying for a banking license and securing additional financing, indicate a broader vision that could lead to a role more significantly in digital banking in the region.

Finally, in Argentina, despite economic challenges, MercadoLibre was able to return to growth in items sold faster than originally forecast.
The country still accounts for a significant portion of the company’s earnings before interest and taxes (EBIT).

While there is a tough base of comparison for the second half, the firm remains comfortable with its base estimates for Argentina given the potential positive impact of any macroeconomic or currency normalization on MercadoLibre’s operations in the country.

Separately, analysts at Bank of America raised their price target on MELI shares from $2,250 to $2,500 “to reflect GMV and credit utilization.”

“We suggest considerable earnings strength in advertising, logistics, loans and wallet financing capable of increasing revenue,” analysts noted.