Itau BBA has reaffirmed an Outperform recommendation on MercadoLibre, maintaining a $2,850 price objective as the company navigates diverging signals from top-line growth and near-term margin performance.
In its note, the bank highlighted continued momentum in Brazil, where gross merchandise volume - GMV - accelerated, rising 35% year-over-year in the fourth quarter despite a tougher macroeconomic environment. For the full year 2025, MercadoLibre's Brazil GMV expanded 32% year-over-year in Brazilian reais, outpacing an estimated market expansion of roughly 20%.
At the same time, the company reported fourth-quarter EBIT of $790 million, a result that missed consensus expectations by 9%. Itau BBA attributed the shortfall to pressure on margins stemming from elevated investment levels as MercadoLibre defends and extends its leadership position in Brazilian commerce.
Despite the earnings miss, valuation indicators remain elevated but not stretched in the bank's view. The stock trades at a price-to-earnings ratio of 46.75 and was trading around $1,724 at the time of the report, roughly a single dollar above its 52-week low of $1,723.90. The note described the shares as remaining undervalued per the analysis cited alongside the research.
Itau BBA pointed to a shift in the competitive and investment cycle as a constructive sign for margins longer term. The firm noted that take-rate increases implemented in early 2026 - largely by Shopee - suggest the most intense phase of the investment cycle is behind the company. The brokerage also flagged stronger GMV growth in Brazil and Mexico, improving credit metrics and slightly better performance in Argentina as supportive elements.
The research team said a further sell-off in the shares following the fourth-quarter EBIT miss would represent a buying opportunity.
Additional reported results show revenue and EBIT both beat Street estimates - revenue by 3% and EBIT by 2% - while overall GMV rose 37% year-over-year, driven primarily by Brazil and exceeding expectations by five percentage points. Total payment volume reached $83.7 billion, ahead of the Street estimate of $78.7 billion.
Broker responses to the quarter were mixed. Cantor Fitzgerald and Raymond James each trimmed their price targets to $2,400 and $2,500 respectively, while maintaining positive ratings, citing concerns over persistent margin pressure. By contrast, JPMorgan upgraded the stock to Overweight and raised its target to $2,800, referencing improved competitive dynamics.
Itau BBA reiterated its Outperform stance while also highlighting a planned logistics fee adjustment in Brazil that could lift earnings per share by approximately 3% in 2026. The firm’s note emphasizes that operational levers such as this, combined with improving credit metrics, support a constructive medium-term outlook even as the company maintains elevated investment spend.
The company has also undertaken workforce reductions as part of its efforts to reallocate resources toward artificial intelligence initiatives. A total of 119 roles were eliminated globally, with 38 of those positions located in Brazil, the company's largest market.
Itau BBA’s view frames the latest results as a combination of robust volume trends - particularly in Brazil and Mexico - and near-term margin drag as management prioritizes growth and strategic investments. The bank’s maintained price target and rating reflect a balance between those growth dynamics and the margin headwinds identified in the quarter.
For investors, the note underscores two main considerations: the durability of marketplace volume expansion in Latin America and the timeline for margin recovery as the investment cycle moderates. Itau BBA’s stance that further weakness in the shares would present a buying opportunity signals confidence in the company’s medium-term trajectory, while acknowledging near-term operational trade-offs.