Analyst Maintains Bullish Stance on MercadoLibre Despite Price Target Reduction

Analyst lowers price target to $2,250 but maintains 'Strong Buy' on MercadoLibre, citing long-term growth drivers like advertising and logistics investments.

Raymond James has reaffirmed its 'Strong Buy' rating for MercadoLibre, even as it lowered its price target for the Latin American e-commerce giant from $2,500 to $2,250. According to the firm's analyst Josh Beck, this adjustment reflects near-term considerations but does not undermine the company's compelling long-term structural growth drivers.

Valuation Presents a Mixed Picture

MercadoLibre's shares currently trade approximately 36% below their 52-week high and have seen significant pressure since the start of the year. A discounted cash flow (DCF) analysis suggests a fair value of around $2,277 per share, implying a potential 24% upside from current levels. However, the stock's price-to-earnings (P/E) ratio of nearly 44x stands at more than double the industry average of about 20x, indicating the market continues to price in substantial future growth.

The analyst consensus remains broadly positive. Of the 19 analysts covering the stock, 15 maintain a 'Buy' recommendation, while four advise investors to hold.

Advertising Business Identified as Key Margin Driver

A central pillar of the bullish thesis is the company's advertising segment. Raymond James projects this division could contribute roughly $3 billion in revenue by 2030, with the potential to expand the EBIT margin by 150 basis points. Further operational efficiencies are also anticipated, including a targeted 5% reduction in cost per unit and shifts in provisioning patterns between 2028 and 2030, which are expected to create additional financial flexibility.

This optimism is tempered by competitive realities. JPMorgan recently highlighted increasing competitive pressures in the critical Brazilian market, a factor that continues to weigh on consensus EBIT estimates.

Major Capital Allocation Toward Logistics and Fintech

On the operational front, MercadoLibre is planning significant capital expenditures for 2026, with a focus on strengthening its logistics network and financial technology offerings in Argentina. Investments in these areas are slated to reach $3.4 billion. The success of this capital allocation strategy in delivering the expected margin improvements will become clearer in the coming fiscal years, particularly as these investment cycles are projected to mature between 2028 and 2030.