eBay's (EBAY) Sale of MercadoLibre (MELI) Shares 'Makes Sense'; Slight Overhang Will Linger - Cowen

October 13, 2016 6:41 AM EDT
Get Alerts MELI Hot Sheet
Price: $158.61 -0.84%

Rating Summary:
    8 Buy, 8 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 36 | New: 11
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Cowen and Company affirms MercadoLibre (Nasdaq: MELI) at Market Perform with a price target of $165 following news that eBay (Nasdaq: EBAY) was selling its 5.5 million share stake in the company.

Analyst Thomas Champion said, The prospectus contained preliminary 3Q results that are mostly in line with our estimates.

The analyst continued, MELI shares were indicating -6% in after hours trading and we expect this offering to be an overhang until the distribution is completed. However, the sale makes sense in our view given: (1) MELI shares have had a strong run of late, +60% YTD; and (2) at current prices, eBay could gross ~$1BN from the transaction (less post-tax) which could then be returned to shareholders via the buyback or used for other investment or M&A. eBay (EBAY, Market Perform, $31.50) shares were +2% after hours. We wrote about the possibility of an eBay sale in our initiation report this past April.

For an analyst ratings summary and ratings history on MercadoLibre click here. For more ratings news on MercadoLibre click here.



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