Every day, Wall Street analysts upgrade some stocks, downgrade others, and "initiate coverage" on a few more. But do these analysts even know what they're talking about? Today, we're taking one high-profile Wall Street pick and putting it under the microscope...

MercadoLibre (MELI -10.38%) broke records with its Q1 2019 earnings report yesterday -- and Wall Street broke out in applause.

Already today, we've seen two different analysts assign higher price targets on the Argentinean e-commerce star, and two more analysts have upgraded it. Investors are catching wind of the good news, and MercadoLibre stock is soaring 19% (as of 11:30 a.m. EDT), with no signs of looking back.

Here's what you need to know.

Miniature shopping cart with boxes in it on laptop keyboard

Image source: Getty Images.

MercadoLibre reports

What did MercadoLibre say to get so many people so excited? My fellow Fool.com contributor Dan Caplinger has the details.

In Q1, MercadoLibre reported "spectacular" numbers, with sales soaring 48% to $473.8 million (versus the $427.7 million that analysts expected, according to TheFly.com), and profits of $0.13 per share -- compared to the $0.13 per share loss that analysts had been predicting! Revenue growth actually accelerated, growing at more than double the 20% pace set one quarter ago, and were it not for widespread currency devaluation in the region, the company's results would have been even better. Caplinger notes that "currency-neutral" sales were up 93%.

How did MercadoLibre manage to produce such astounding growth? The reason won't be a mystery to longtime readers of this column. In fact, back in November of last year, analysts at BTIG predicted exactly this dynamic, as MercadoLibre follows the playbook printed out by eBay years ago, and morphs from a e-commerce platform with an ancillary payments facilitation business into one where the payments division -- MercadoPago -- takes on increasingly greater significance.

And indeed, as Caplinger points out, gross merchandise volume at MercadoLibre actually slumped 2% in dollar terms. But that was more than made up for by 35% growth in "total payment volume" (and a 19% increase in units shipped via MercadoLibre's MercadoEnvios shipping service).

What Wall Street said about that

Outside of BTIG, the rest of Wall Street is now starting to twig to this story. At Deutsche Bank, analysts hailed the quarter as "strong" -- strong enough to justify an upgrade to buy.

At Credit Suisse, analysts were surprised to find that the decline in gross merchandise volume didn't cause a revenue miss. Already positive on the stock, Credit Suisse upped its price target to $640 per share.

Piper Jaffray was particularly impressed with MercadoLibre's movement from losses into profits. (I expect that's a widely felt sentiment today.) Also positive on the stock already, Piper Jaffray increased its price target to $584.

And even Susquehanna -- a confirmed MercadoLibre skeptic -- was sufficiently shaken by the magnitude of this week's earnings beat to withdraw its negative rating on the stock and upgrade to neutral.

Has the train left the station?

But how should you react to MercadoLibre's "spectacular" news? With the stock up nearly 20% today (yes, it's gone up another percent, even in the short time it's taken me to write this much), and up 46% over the past year, it's natural to wonder if the easy money has already been made on MercadoLibre, and that it's too late to profit from it.

I absolutely understand that sentiment. Indeed, when I look at MercadoLibre today and see the company remains unprofitable over a trailing-12-month basis and shares sell for an astounding 95 times trailing free cash flow, I kind of shudder a little bit myself.

That being said, when you see revenue not just growing at a business like this, but that growth actually accelerating, and when you hear the CFO say things like the new-ish payments business is only now "gaining traction in its online to offline efforts" -- that kind of gives the impression that MercadoLibre's best days may still be ahead of it.

So while I can't in good conscience tell you to buy the stock at its current valuation, I absolutely would not risk shorting MercadoLibre.