© Reuters. MercadoLibre (MELI) earnings power ‘considerable’ – BofA
MercadoLibre (NASDAQ:) has considerable earnings power, according to Bank of America analysts in a note to clients Thursday.
The analysts reiterated a Buy rating and $2,000 price target on MELI shares in the note, saying they see large and easily identifiable opportunities across advertising, logistics, bad debt, wallet funding, and other markets.
“We also suggest scale, rising delivery densities, 1P (first-party) offers, and artificial intelligence are likely to fuel earnings power,” the analysts wrote.
BofA sees several themes that “suggest a cumulative $9.5 billion EBIT and $6.4 billion net income opportunity for MercadoLibre over the next five years.
Those themes include advertising growing by over five percentage points of gross merchandise value, MELI transforming a $1.4 billion cost to a modest profit center, the company’s 8% bad debt on three-month duration credits likely declining, and more efficient wallet funding.
“While we look for some reinvestment, we also look for a substantial portion to drive earnings growth,” the analysts concluded.
