MercadoLibre is the IBD Stock of the Day, as MELI stock is forming a bullish cup-with-handle base. The e-commerce behemoth recently beat expectations with a third-quarter report that showed strong earnings.
U.S.-listed MELI stock has gained 60% this year. Often described as the Amazon.com of Latin America, MercadoLibre offers e-commerce and online payments services in 18 countries. The company was founded in Argentina in 1999 and is headquartered in Montevideo, Uruguay.
MELI shares jumped 17% in trading last week after the company's third quarter report showed a 180% earnings jump and 40% sales increase.
On the stock market today, MELI stock rose 2.5% to close at 1,374.39.
MELI stock will have a cup-with-handle base following trading Friday, with a buy point of 1398.59. Thursday's high of 1,383.31 could also serve as an early entry point.
Q3 Earnings Ahead Of Expectations
On Nov. 1, MercadoLibre said it earned an adjusted $7.16 per share on sales of $3.8 billion. That easily topped analyst expectations of $5.88 adjusted earnings per share and sales of $3.6 billion.
In the same quarter last year, MercadoLibre earned $2.56 per share on sales of $2.7 billion.
On its earning call, the firm highlighted revenue growth of more than 40% in Brazil and just over 60% in Mexico, the company's largest markets.
Total unique buyers on its e-commerce marketplace grew 18% year over year to more than 50 million in the third quarter, the company said.
Gross merchandise volume of $11.4 billion topped expectations of $1.03 billion. Total payment volume handled by the firm's Mercado Pago fintech division climbed 47% year over year to $47.3 billion.
Analysts Raise Targets
"The underlying business showed broad-based strength in (the third quarter) with growth accelerating sequentially across e-commerce and Fintech," wrote Wedbush analyst Scott Devitt in a client note following the report.
Devitt, who maintained a buy rating on MELI stock, was among eight analysts to raise their target price for MELI following the report, according to FactSet.
For the full year, analysts expect MercadoLibre's revenue to climb 34% to $14.1 billion, according to consensus from FactSet. Analysts hold an average target price of 1,661.37, according to FactSet, implying 22% upside from Friday's price.
Something to watch: A runoff presidential election in Argentina is scheduled for Nov. 19 and the country is facing what many have described as an economic crisis. The Argentina-founded MercadoLibre's largest market is Brazil and the company has downplayed its exposure to uncertainty in Argentina during previous earnings calls.
MELI Stock: Technical Ratings
MELI stock has an IBD Composite rating of 97 out of a best-possible 99, according to IBD Stock Checkup. The score means MELI stock currently tops 97% of all other stocks in terms of key performance metrics and technical strength.
MELI stock's relative strength line is near a high point. The company's Relative Strength score of 90 indicates it is outperforming 90% of stocks, based on price growth.
MercadoLibre is the second rated company among 60 stocks in the IBD MarketSmith Retail-Internet industry group. Auction services company Liquidity Services is the No. 1-ranked. Amazon.com ranks No. 4.
The earnings results last week added to a run of growth. MELI stock has EPS Rating of 82. That means recent quarterly and longer-term annual earnings growth is outpacing 82% of all stocks.
Also, MELI is on the IBD 50 and IBD Tech Leaders lists.
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