JP Morgan has recently upgraded the rating for Latin American e-commerce and fintech leader MercadoLibre from "neutral" to "overweight." The bank believes that the "intensity of subsidies" in Brazil's e-commerce war is showing signs of cooling, combined with the company’s more confident pricing strategy, which makes profit expectations more stable for the next two years.
Shift in Competitive Cues: Shopee Raises Fees, Easing Price War Pressure
JP Morgan mentioned that after Shopee recently increased its commission rates, the fee levels for high-ticket items are now closer to those of MercadoLibre. This is seen as a more restrained approach by competitors towards "burning cash for growth." Meanwhile, MercadoLibre reflecting inflation pressures in some fixed costs indicates the company's stronger confidence in the competitive environment. Regarding Amazon's ongoing promotions, JP Morgan judges the overall impact to be relatively controllable.
Earnings Expectations: No Longer Concerned About Significant Downgrades in 2026-2027
In terms of earnings, JP Morgan states that they no longer see "substantial downside risk" in the market's consensus expectations for 2026 and 2027. The rationale is that since mid-2025, market profit expectations, affected by competition concerns, have already undergone a significant downward revision; the current prediction level is more in line with the new competitive landscape.
Core Market Brazil: GMV Growth Rate Still Has Favorable Outlook, Strong Trend May Continue
JP Morgan continues to view Brazil as the main engine of growth, expecting the fourth quarter 2025 GMV growth rate in Brazil (in local currency) to remain above 30%. This is due to both the relatively low base from last year and improved app usage; it is also expected that Brazil GMV in 2026 can still achieve about a 25% growth.
Target Price Raised to $2,800: Supported by Higher Revenue and Profit Assumptions
Based on the above assessments, JP Morgan raised the target price for MercadoLibre for December 2026 from $2,650 to $2,800. The bank is also more optimistic about its core assumptions for 2026: revenue, operating profit, and profit growth rates are approximately 35%, 34%, 41% respectively, citing factors such as a stronger currency in Brazil and Mexico, margin recovery, and faster expansion of the credit business.
Valuation and Rankings: "Preferred" Among Latin American Tech, But Still a High-Premium Stock
In terms of valuation framework, JP Morgan points out that the stock roughly corresponds to about 35 times the expected earnings for 2026 and about 26 times for 2027, with profits expected to maintain a compound annual growth rate of approximately 34% through to 2029. Therefore, it is listed as one of the top choices in the Latin America technology sector.
