MercadoLibre Surges After Locked-Down Consumers Flock Online

(Bloomberg) -- Shares of MercadoLibre Inc. jumped as Latin America's largest e-commerce marketplace benefited from accelerating online sales in the region.

The Buenos Aires-based company's net revenue reached $652 million in the first quarter, beating analysts' estimate of $629 million. Gross merchandise and total payment volume jumped 34% and 82% on a yearly basis, respectively.

The stock soared as much as 25.3% in the U.S. to an all-time high. MercadoLibre also climbed above the average analyst's 12-month target for the first time since February, according to data compiled by Bloomberg.

Despite the first few weeks of virus restrictions, MercadoLibre said gross merchandise volume growth accelerated to 73% in April. “Consolidated April growth rates are above pre-Covid levels driven by Argentina, Chile, Colombia, and Mexico with Brazil still lagging somewhat,” Chief Financial Officer Pedro Arnt said on the earnings call Tuesday.

With the pandemic expected to reshape consumer habits and encourage online shopping, MercadoLibre has been calibrating investments and prioritizing fast-growing items such as consumer packaged goods. According to Arnt, the company could see some virus-related costs to logistics, but supply chains in total haven't suffered.

“Results and management's comments about strong growth in April are likely to lead to upwards pressure on consensus revenue estimates,” Bradesco BBI analysts led by Richard Cathcart wrote in a report Tuesday.

Here's what Wall Street analysts have to say:

Barclays, Deepak Mathivanan

Growth accelerated sharply in April as Latin American consumers meaningfully shifted their purchases to online channels
“Strong tailwinds in the Covid-19 world”
Overweight; price target $810 from $620

Bradesco BBI, Richard Cathcart

MercadoLibre “will be one of the region's winners through the current crisis, which we expect to accelerate the shift to online retail”
Growth in Brazil was a little weak and lower than competitors, which needs to be monitored in the next few quarters
Neutral; target $590

Citi, Tobias Stingelin

Upgraded to buy on secular growth and margin improvement
Marketing investments might increase again, but might be lower than anticipated
- NOTE: May 5, MercadoLibre Expects Spending Increasing as Revenue, Volume Jump
Price target $716 from $660

Credit Suisse, Stephen Ju

Current environment to catalyze faster, long-term adoption of underpenetrated e-commerce categories
Price target $770 from $720

Itau BBA, Thiago Macruz

MELI is poised to deliver strong GMV and TPV growth as well as top-line expansion in coming quarters
Market perform

Jefferies, John Colantuoni

Near-term shift toward e-commerce, particularly in categories like grocery and consumer packaged goods, will benefit MELI's top-line even after the pandemic ends
Cites ongoing uncertainty created by heightened competition in Brazil
Hold; price target $800 from $510

Morgan Stanley, Andrew Ruben

Strong first quarter, with revenue coming in 5% above Morgan Stanley's estimate
“We believe our forecast of 10% LatAm eCommerce penetration in 2025 (from ~5% today) could be pulled forward”
Overweight; PT $760 from $680