MercadoLibre Earnings: Margin Compression Shouldn't Detract From Another Quarter of Stellar Growth

We remain believers in the wide-moat MercadoLibre grand narrative, with the firm's sprawling ecosystem of touchpoints across commerce, credit, fulfillment, and advertising underpinning a strengthening moat for the Latin American retail and financial technology stalwart. After digesting the firm's fourth-quarter results—$4.3 billion in sales edged our $4.1 billion forecast but "just" $586 million in adjusted operating income missed our $685 million expectation—we plan to raise our $1,330 fair value estimate by a mid-single-digit percentage, slightly better than suggested by time value. We also plan to lower our Morningstar Uncertainty Rating to High from Very High, consistent with our quantitative methodology. Shares still look expensive.