MercadoLibre (MELI) Gains on Positive Comments from JPMorgan

MercadoLibre (NASDAQ: MELI) shares up over 5% on the session, following a robust upgrade from J.P. Morgan to Overweight (from Neutral) and new price target of $500 (from $144).

Analyst Andre Baggio highlights MELI's emerging financial technology (FinTech) ventures as a long-term growth driven, citing an "impressive e-commerce business" with upside in payment and credit verticals, with management focused on "top-line growth." Baggio points to MELI as the "winning platform" for clients interested in Latin American e-commerce, with GMV up 44% year over year in 2017 and expected to accelerate to 56% GMV growth in 2018.

The J.P. Morgan analyst notes that "e-commerce remains under-penetrated in LatAm," representing only 3% of retail, offering massive growth upside for the sector and MELI shares. Baggio suggests the promising sector growth outlook, further supports expectations for robust results in the coming years from MELI's marketplace business and emerging FinTech ventures.

The new valuation at $500 is driven by a new sum-of-the-parts valuation model, supported by a marketplace valuation of $350, an off-payments platform valuation of $90, a credit business valuation of $25 and $35 valuation on cash plus other businesses.

The new price target represents 33% upside from Tuesday's close.

StreetInsider Premium first published a variation of this article at 4:22 AM ET. Try StreetInsider Premium for two weeks free here.

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