Marcelo Santos, an analyst from J.P. Morgan, maintained the Hold rating on Mercadolibre. The associated price target was raised to $2,700.00.
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Marcelo Santos has given his Hold rating due to a combination of factors affecting Mercadolibre’s current and future performance. The company is experiencing increased competition in Brazil, particularly from players like Shopee, which has intensified the market dynamics. This competitive pressure has led Mercadolibre to adjust its shipping policies and increase marketing efforts, which, while necessary for growth, also require significant reinvestment that could hinder margin expansion.
Despite the strong revenue growth projections for the coming years, Marcelo Santos is cautious about the company’s ability to meet consensus expectations for margin improvements. The expected increase in EBIT margins seems unlikely, with projections indicating a decline instead. Consequently, while Mercadolibre has a promising long-term outlook due to its strong position in the Latin American e-commerce and consumer banking markets, the immediate challenges and reinvestment needs justify the Hold rating.
In another report released on August 5, Jefferies also maintained a Hold rating on the stock with a $2,800.00 price target.