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Analysts Just Slashed Their MercadoLibre, Inc. (NASDAQ:MELI) Earnings Forecasts

Simply Wall St
·2 mins read

The analysts covering MercadoLibre, Inc. (NASDAQ:MELI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the 20 analysts covering MercadoLibre are now predicting revenues of US$2.6b in 2020. If met, this would reflect a notable 12% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$3.0b of revenue in 2020. It looks like forecasts have become a fair bit less optimistic on MercadoLibre, given the substantial drop in revenue estimates.

View our latest analysis for MercadoLibre

NasdaqGS:MELI Past and Future Earnings May 4th 2020
NasdaqGS:MELI Past and Future Earnings May 4th 2020

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MercadoLibre's past performance and to peers in the same industry. We would highlight that MercadoLibre's revenue growth is expected to slow, with forecast 12% increase next year well below the historical 28% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it seems obvious that MercadoLibre is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on MercadoLibre, and a few readers might choose to steer clear of the stock.

But wait - there's more! At least one of MercadoLibre's 20 analysts has provided estimates out to 2024, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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