Brazilian crisis Americanas leads MercadoLibre to a better start to the year

Shares of the e-commerce retailer and financial technology provider based in Buenos Aires They are up about 31% this year on optimism the company will gain market share after its Brazilian rival filed for bankruptcy protection amid 43 billion reais ($8.4 billion) in liabilities.

Companies that sell producer through Americanas could now question their relationship, potentially increasing MercadoLibre’s bargaining power, according to Goldman Sachs Group Inc. analysts led by Irma Sgarz. The bank’s channel checks indicated that some Brazilian suppliers are already adjusting conditions for Americanas, and sellers have also removed promotions or raised prices given the uncertain scenario.

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“We see a potential opportunity for shares to rise”wrote sgarz in a note dated January 23.

The stock is also getting a boost as investors price in the end of the cycle of interest rate hikes in the United States and start to factor in a possible political shift in Argentina, the company’s second-biggest market, which is due to hold presidential elections in 2023. , according to Malcolm Dorsonportfolio manager Mirae Asset Global Investments In New York.

“Emerging market stocks are getting a big deal, and this is a market favourite”he pointed Dorsonwho has been holding MercadoLibre shares since 2019. “I expect the momentum of financial results to continue.”

Free market it was already gaining market share in Brazil before the problems at Americanas, as the company begins to see profits from competitors suffer declines.

The company’s net income is expected to hit a record $3 billion in the fourth quarter, up from $2.7 billion in the third quarter, according to the Bloomberg Consensus Estimate. Gross merchandise volume and total payment volume should be $9.4 billion and $35.6 billion, respectively.

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“If we look at global e-commerce, very few players have created an ecosystem with the breadth and quality that MELI has created”said ignacio arnauMadrid-based fund manager of Bestinver Asset Managementwhich has to Free market as the largest share of his fund. “In Brazil they continue to distance themselves from the rest, and the whole Americanas debacle should help them accelerate their growth and maintain their leadership position.”