JPMorgan downgraded MercadoLibre (MELI) from Overweight to Neutral and lowered its price target to $2,100 from $2,650. The investment bank stated that its previous thesis for upgrading the stock is no longer valid.
Analyst Marcelo Santos cited intensified competition and reduced profitability expectations as the primary drivers for the move. Competitor Shopee is reportedly sacrificing margins to gain market share in the key Brazilian market.
JPMorgan reduced its long-term margin forecast for MercadoLibre from 17% to 14%. The firm also projects a potential 15% downside to 2026 consensus EBIT.
MercadoLibre shares have declined 24.5% over the past six months. The stock is currently trading near its 52-week low, reflecting broader market concerns regarding the company's competitive positioning.