MeracdoLibre $MELI full earnings preview below, bullish chart
Via OptionsHawk.com
Mercado-Libre (MELI) will report earnings 2/21 after the close with the Street calling for ($0.11) EPS and 411.7M in Revenues (-5.8%) on tough Y/Y comps, while Q1/FY19 seen at ($0.16)/418.9M. Shares have closed higher 9 of its last 11 reports with a six quarter average max move of 9.6% and average closing move of 7.4%. The 16.3B operator of an online commerce platform in Latin America that has also pushed into Payments trades 8.2X FY19 EV/Sales and sees 37% revenue growth for 2019 and 42.8% growth for 2020 with profitability set to ramp in 2020 as well after 2017/2018 were key investment years. MELI has historically traded in a 6.5X to 9X EV/Sales range. Analysts have an average target of $377.50 on shares and short interest is 6.8% of the float, down 11.5% Q/Q. Goldman started coverage on 2/5 with a Buy rating and $438 target expecting it to defend and expand its leadership position in the Latin American e-commerce market and numerous structural growth opportunities in the region. BTIG was out on 1/16 with app tracking metrics showing increased market share lead in mobile wallets and a strong position in Latin America payments. CSFB has an Outperform rating and $398 target and previewed Q4 results on 1/28 noting the company’s well known efforts to slow down Marketplace unit growth and anemic growth set to continue until lapping these changes in Q3 2019. It sees MELI’s take rate rising to 15.5% from 12% in the next five years, Street numbers too low, and optionality of increased take rates. Hedge Fund ownership fell 36.5% in Q4 filings with Lone Pine Capital, Tiger Global, Criterion, and Carmignac Gestion reducing positions while Jericho and Cadian sold out of positions. On the chart MELI is sitting just below a key weekly trend line and above a key VPOC level. A move above $370 measures to a longer term target of $460 and weekly RSI has already broken out of a downtrend and monthly MACD nearing a bull crossover. The options market is only pricing in a 4.3% earnings move which is cheap compared to historical actual moves. MELI has a number of notable positions in open interest with over 12,500 March $290 now deep ITM calls bought in November and December, 7,000 March $320 synthetic long positions that have strategically been rolling, and 1,000 March $340 calls opened on 12/20 rolling from Jan. $310 calls. MELI’s 30 day IV Skew of +6.7% is steep compared to the +2% 52-week average.
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Mercado-Libre (MELI) will report earnings 2/21 after the close with the Street calling for ($0.11) EPS and 411.7M in Revenues (-5.8%) on tough Y/Y comps, while Q1/FY19 seen at ($0.16)/418.9M. Shares have closed higher 9 of its last 11 reports with a six quarter average max move of 9.6% and average closing move of 7.4%. The 16.3B operator of an online commerce platform in Latin America that has also pushed into Payments trades 8.2X FY19 EV/Sales and sees 37% revenue growth for 2019 and 42.8% growth for 2020 with profitability set to ramp in 2020 as well after 2017/2018 were key investment years. MELI has historically traded in a 6.5X to 9X EV/Sales range. Analysts have an average target of $377.50 on shares and short interest is 6.8% of the float, down 11.5% Q/Q. Goldman started coverage on 2/5 with a Buy rating and $438 target expecting it to defend and expand its leadership position in the Latin American e-commerce market and numerous structural growth opportunities in the region. BTIG was out on 1/16 with app tracking metrics showing increased market share lead in mobile wallets and a strong position in Latin America payments. CSFB has an Outperform rating and $398 target and previewed Q4 results on 1/28 noting the company’s well known efforts to slow down Marketplace unit growth and anemic growth set to continue until lapping these changes in Q3 2019. It sees MELI’s take rate rising to 15.5% from 12% in the next five years, Street numbers too low, and optionality of increased take rates. Hedge Fund ownership fell 36.5% in Q4 filings with Lone Pine Capital, Tiger Global, Criterion, and Carmignac Gestion reducing positions while Jericho and Cadian sold out of positions. On the chart MELI is sitting just below a key weekly trend line and above a key VPOC level. A move above $370 measures to a longer term target of $460 and weekly RSI has already broken out of a downtrend and monthly MACD nearing a bull crossover. The options market is only pricing in a 4.3% earnings move which is cheap compared to historical actual moves. MELI has a number of notable positions in open interest with over 12,500 March $290 now deep ITM calls bought in November and December, 7,000 March $320 synthetic long positions that have strategically been rolling, and 1,000 March $340 calls opened on 12/20 rolling from Jan. $310 calls. MELI’s 30 day IV Skew of +6.7% is steep compared to the +2% 52-week average.
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