MercadoLibre (MELI) Is Considered a Good Investment by Brokers: Is That True?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on MercadoLibre (MELI), and emphasizes the importance of using these recommendations in conjunction with other analytical tools for making investment decisions [1][4]. Brokerage Recommendations - MercadoLibre has an average brokerage recommendation (ABR) of 1.21, indicating a consensus between Strong Buy and Buy, based on recommendations from 17 brokerage firms [2]. - Out of the 17 recommendations, 15 are classified as Strong Buy, which constitutes 88.2% of the total recommendations [2]. Limitations of Brokerage Recommendations - The article highlights that relying solely on brokerage recommendations may not be wise, as studies show limited success in guiding investors towards stocks with the best price increase potential [4]. - Brokerage firms often exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [5][9]. Comparison with Zacks Rank - The Zacks Rank, which is based on earnings estimate revisions, is presented as a more reliable indicator of near-term stock price performance compared to ABR [7][10]. - The Zacks Rank is timely and reflects the latest earnings estimates, while ABR may not always be up-to-date [11]. Earnings Estimates for MercadoLibre - The Zacks Consensus Estimate for MercadoLibre's current year earnings has increased by 1.1% over the past month to $47.50, indicating growing optimism among analysts [12]. - The recent change in consensus estimates, along with other factors, has resulted in a Zacks Rank 2 (Buy) for MercadoLibre, suggesting a positive outlook for the stock [13].