'Latam Amazon' MercadoLibre Upgraded To Buy At Stifel

Stifel upgraded shares of MercadoLibre Inc. to buy from hold on Friday and said the company has built a strong position in Latin America and will be insulated from competition during the current investment cycle. Describing the e-commerce and payments platform as the Amazon of Latin America, Stifel analysts led by Scott Devitt said MercadoLibre management has succeeded in making the company the biggest online marketplace in the region over the last 17 years. "The company has grown through multiple macroeconomic and geopolitical headwinds," Devitt wrote in a note. "Active users have grown to over 191mm and the company currently generates an annualized run rate of nearly $11B in GMV (gross merchandise value)." Latin America is still an undeveloped online market with about 2.7% e-commerce penetration, compared with 12% in the U.S. Amazon has a limited presence there excluding Mexico, where it recently launched its Prime service. Amazon's expansion has had little impact on MercadoLibre's growth in the region, said the note. "Relative to the size of its potential market, we view MercadoLibre's $11B market cap as underappreciating the long-term prospects of a market leader backed by multiple favorable secular tailwinds (shift to online retail, mobile, payments, improving infrastructure, and growing middle class consumer) with an attractive asset-light marketplace mode," said the note. MercadoLibre shares were up 0.8% in premarket trade, and have gained 56% in 2017, while the S&P 500 has gained 8.5%.

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