Last Minute Thought: Buy or Sell MercadoLibre (MELI) Stock Before Earnings?


We’re at the height of the earnings season, and the reports are coming in think and thin. Watch closely, because markets will react quickly should a company report unexpected results. And those surprises don’t have to hurt, either. So far, about half of the S&P 500 firms have reported quarterly results, and so far, those results are about 2% above the estimates. It’s good news, considering investors had expected a slow season.

You can keep track of your favorite stocks using TipRanks Earnings Calendar. This handy tool offers a convenient calendar showing exact reporting dates for over 5,500 stocks. Click on the one you like, and you’ll get the nitty-gritty details – the consensus EPS forecast, the period covered, the year-ago results, plus a clear chart showing the last two years’ actual results.

We’ve opened up the calendar and found a “strong buy” stock reporting earnings today after market close.

MercadoLibre (MELI)

So much attention goes to the American tech companies that it’s easy to overlook other markets. Which is too bad, because there are plenty of great stocks in the foreign markets. MercadoLibre, a leader in the Latin American e-commerce industry, is one of those. This Argentine company incorporated in the US and trades on the New York Stock Exchange. This year marks its twentieth year in business.

It’s been good business, too. MercadoLibre boasts over 175 million users, and brings in over $1.2 billion in annual revenues. The company operates five divisions, including an e-commerce platform, an advertising platform, and financial services. MercadoLibre processes more than 140 million annual transactions and handles both the seller and customer ends of e-commerce.

Putting pressure on the company are the results of Argentina’s recent election. The defeat of the business friendly Macri government raises fears that the new government may push anti-capitalist policies and restrict growth. Still, the forecast for Q3 is strong, and MercadoLibre has resources to weather a storm. Analysts expect to see over $604 million in quarterly revenue, or 70% year-over-year growth. Even better, the 2-cent EPS forecast will effectively cancel last Q3’s 23-cent loss.

4-star analyst Andre Baggio, of JPMorgan, sees MELI as a growth prospect. He writes, “We are Overweight on MercadoLibre, as the company presents a unique combination of leadership on e-commerce coupled with accelerating growth on FinTech. Moreover, MELI showed impressive resilience to macroeconomics slowdown, being able to sustain growth even in unfavorable conditions.” Baggio’s $750 price target suggests an impressive 38% upside for the stock. (To watch Baggio’s track record, click here)

The Street largely seems to echo Baggio’s positive sentiment, considering TipRanks analytics showcase MELI as a Strong Buy. Out of 11 analysts polled by TipRanks in the last 3 months, 9 are bullish on MercadoLibre stock, while 2 remain sidelined. With a potential upside of about 31%, the stock’s consensus target price stands at $700. (See MercadoLibre stock analysis on TipRanks)

 

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