MELI - MercadoLibre: It May Be Just The Beginning Of A Great Rally
2024-07-08 03:35:16 ET
Summary
- MercadoLibre stock has increased by 21.6% since my bullish call three months ago, outperforming the S&P 500 index. I believe it's just the beginning.
- After MELI's Q1 results, Wall Street estimates have not increased significantly overall. But the business is blooming as far as I see.
- MercadoLibre's fintech arm, MercadoPago, is driving high-quality growth, with significant increases in total assets under management and credit portfolio.
- The company's operating profit margin could reach 35% by 2028, potentially increasing its stock to $2,300-$2,500 shortly, based on my DCF model.
- I believe that MELI's long-term uptrend will continue - hence my "Buy" rating update today.
About three months ago, I published my first article on MercadoLibre ( MELI ), whose shares were trading around $1,360 apiece at the time. I was of the opinion that the contraction in margins in the fourth quarter was probably a one-off event and that the company was very well positioned for the long term with its investments. My discounted free cash flow valuation model [DCF] indicated an undervaluation of at least 40%. Over the last three months, the stock is up 21.6%, almost twice as much as the broad market index S&P 500 ( SP500 ) ( SPY ). I was lucky enough to basically "catch the local low" in MELI 3 months ago:
My previous article on MELI
