MercadoLibre faces tougher path to margin expansion, analysts turn neutral
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E-mailInvesting.com -- Analysts downgraded MercadoLibre to Neutral/High-Risk from Buy following weaker-than-expected first-quarter 2026 results, citing growing uncertainty around the company’s margin outlook despite continued strong revenue growth.
The note from Citi said that MercadoLibre’s aggressive investment cycle has lasted longer and been more intense than previously anticipated. Analysts pointed to ongoing spending initiatives and rising competitive pressure, including recent take-rate compression, as factors making future monetization and margin expansion harder to forecast.
While the firm maintained confidence in management’s long-term capital allocation strategy and its ability to strengthen MercadoLibre’s competitive moat, it warned that earnings visibility has deteriorated.
The analysts said additional downward revisions to market expectations remain likely, noting their own 2027 and 2028 net income forecasts are 11% and 12% below Visible Alpha consensus estimates.
The price target was reduced to $1,950. Analysts added that investors comfortable with elevated uncertainty may still see attractive upside potential, but current risk-reward dynamics appear more balanced given limited clarity on the company’s profitability trajectory.
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