The stock plunged 9.6% yesterday after the country's election results
J.P. Morgan Securities upgraded Mercado Libre, Inc. (NASDAQ:MELI) to "overweight" from "neutral," and lifted its price target to $750 from $563 -- a 20% premium to last night's close at $623.65 -- saying the Argentinian online auction name has shown strength in an underpenetrated e-commerce area. The brokerage firm also cited an attractive entry point after MELI stock sold off yesterday on Argentina's shocking primary election results.
More specifically, MELI shares fell 9.6%, their biggest one-day drop since Dec. 24. However, the stock found support at its 80-day moving average -- a trendline that helped contain a pullback from earlier this month, and a subsequent bounce from here helped catapult Mercado Libre to a record high of $698.98 last Friday, Aug. 9. Today, the equity is up 2.2% in electronic trading.
There's room for more bull notes to come through on a stock that's more than doubled on a year-to-date basis. Prior to today, six of 12 brokerages maintained a tepid "hold" rating on MELI. Plus, the average 12-month price target of $662.80 represents expected upside of just 6.3% to last night's close.
A round of short covering could fuel a bigger bounce for MELI shares, too. Short interest jumped 11.7% in the latest reporting period to 1.88 million shares. This accounts for a healthy 4.6% of the stock's available float, and would take almost four days to cover, at the equity's average pace of trading.