MercadoLibre earnings power ‘considerable’ – BofA By Investing.com

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<span>© Reuters. MercadoLibre (MELI) earnings power ‘considerable’ – BofA</span><br />
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<p><span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> MercadoLibre </span></span> </span></span> (NASDAQ:) has considerable earnings power, according to Bank of America analysts in a note to clients Thursday. </p>
<p>The analysts reiterated a Buy rating and $2,000 price target on MELI shares in the note, saying they see large and easily identifiable opportunities across advertising, logistics, bad debt, wallet funding, and other markets. </p>
<p>“We also suggest scale, rising delivery densities, 1P (first-party) offers, and artificial intelligence are likely to fuel earnings power,” the analysts wrote. </p>
<p>BofA sees several themes that “suggest a cumulative $9.5 billion EBIT and $6.4 billion net income opportunity for MercadoLibre over the next five years.</p>
<p>Those themes include advertising growing by over five percentage points of gross merchandise value, MELI transforming a $1.4 billion cost to a modest profit center, the company’s 8% bad debt on three-month duration credits likely declining, and more efficient wallet funding. </p>
<p>“While we look for some reinvestment, we also look for a substantial portion to drive earnings growth,” the analysts concluded.</p>
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