JP Morgan analyst Marcelo Santos downgraded Mercado Libre from overweight to neutral.
From the investment bank, JP Morganthey lowered the rating of Free market from overweight to neutral. One of that entity’s executives cited near-term pressures on profits as the company begins to accelerate growth in its credit card business.
It should be noted that, so far in 2024, Mercado Libre shares have risen 29% and in the last twelve months they have advanced 56%. However, after the rating change, on Wednesday, The papers fell 4.6%.
In this regard, this bank revealed that the normalization of the tax rate and exchange losses will probably “will negatively affect profits,” and it was highlighted that new distribution centers could impact margins.
Even so, they reaffirmed their optimism about Mercado Libre’s long-term prospects, considering the growth potential in electronic commerce in the region and the great opportunities in digital banking.
“The credit card business is essential to expand digital banking and raise capital, but We believe that the market does not fully perceive the short-term pressure generated by a net interest marginafter the losses, which is initially very low,” explained Marcelo Santos, JP Morgan analyst.
Despite this, he maintained his target price at US$2,400.
Source: Ambito
