There was exciting news for MercadoLibre in Monday afternoon’s trading. Sufficiently exciting, in fact, to prompt better than a 5% gain in MercadoLibre (NASDAQ:MELI) shares over the session. The news came down from JPMorgan, who gave the online retailer some major kudos.
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JPMorgan declared MercadoLibre no less than its “top pick in tech.” That designation came with not only a rating of “overweight,” but also a big, shiny new price target. The former target was $1,700; now it’s up to $2,000, which is sufficient to represent a new high on Wall Street. Spelling out the reasons behind the gains was a note from Marcelo Santos, who noted that the “…broad-based strength” seen in the second quarter was sufficient for JPMorgan to hike its earnings estimates. Further, new disclosure means reduced risk, and that’s going to help keep the damage from potential upcoming devaluations low.
Further, there’s a lot to be said for MercadoLibre’s impressive diversification. Recently, it celebrated its insurance business, which now reaches five million clients. That puts it on track to become the biggest financial / e-commerce ecosystem in the Latin American region. Since it focuses on lower income to middle-lower income people, it’s finding a brisk business in that niche. And, while MercadoLibre had some troubles in Argentina, its successes in Brazil and Mexico are doing a fine job of balancing things out.
The larger analyst community also shares JPMorgan’s optimism. With seven Buy ratings and three Hold, MercadoLibre is considered a Moderate Buy. Further, with an average price target of $1,561, MercadoLibre also comes with a 14.16% upside potential.
