Jefferies upgrades rating, MercadoLibre stock attracts investor attention

Investing.com – MercadoLibre Inc(NASDAQ:MELI) shares drew investor attention on Tuesday, as Jefferies raised its rating on the stock from “Hold” to “Buy”.

However, the analyst cut the company’s price target from $2,800 to $2,600, citing that the stock’s recent valuation decline has created a rare entry opportunity for investors.

Upgrade to InvestingPro for more market insights - 50% off

The company’s share price fell slightly on Tuesday.

“We back MELI’s consistent approach and its proven track record of investing in long-term growth opportunities. The earnings downgrade caused by margin compression has pushed the valuation to historical absolute and relative lows. Increased investment is being rewarded through stronger revenue drivers and the dilution of operating expenses,” the research report said.

Despite the company’s significant expansion of its business footprint over the past five years, MercadoLibre’s valuation has fallen to historical levels. The analyst noted that, based on 2026 expectations, the stock’s enterprise value-to-sales ratio is at a historical low of 1.8x. Investors have been worried that the company’s profit margins would compress due to aggressive spending on logistics and credit. However, Jefferies analysts believe these investments are “paying off.”

The analyst report said the company increased its total facility area by nearly two times between 2022 and 2025, especially in Brazil and Mexico. Due to this rapid expansion, capacity utilization remains at a decade low.

“Since MercadoLibre’s share price first reached its current level in December 2020, net revenue growth has increased more than sevenfold, and earnings before interest and taxes has grown 25 times,” the report said. The current 0.8x price-earnings growth (PEG) is well below the sector peers’ range of 1.2x to 1.5x.

Intensifying competition in Brazil’s e-commerce market became the main topic for the second half of 2025. In recent months, both MELI and Shopee have increased seller fees, and Amazon has ended its near-zero commission policy. In addition, there are no signs that competition is hindering MELI’s user base, transaction volume, or GMV growth—all of which continue to show strong momentum, the report said.

Jefferies said the company views MercadoLibre as the region’s top growth player, with multiple ongoing expansion opportunities. Our forecasts estimate that e-commerce GMV will rise from $65 billion in 2025 to $169 billion in 2030, while out-of-platform merchant acquiring TPV is expected to triple over the same period, growing from $123 billion to more than $400 billion.

This article was translated with the assistance of AI. For more information, please see our Terms of Use.