What happened
The stock market was having a strong session on Thursday, with all three major indexes well into positive territory. However, Latin America e-commerce and fintech specialist MercadoLibre (MELI 8.27%) was a particular standout. As of 1 p.m. EST, shares of the fast-growing company were higher by more than 9%.
So what
There are two likely reasons for today's move. First, MercadoLibre has been hit hard in the recent tech sector slump, and most of those beaten-down stocks are rebounding sharply. In fact, the tech-heavy Nasdaq is by far the best-performing index of the day, up by nearly 3%.
Image source: Getty Images.
Second, MercadoLibre received an analyst upgrade. BTIG upgraded MercadeLibre from neutral to buy and announced a $1,720 price target. Even after today's sharp rally, this implies another 10% upside.
Analysts are rather divided on MercadoLibre. While the stock has a bullish rating by most analysts who cover it, price targets range from a low of $1,075 to a high of $2,500, so today's upgrade is certainly encouraging. And it follows an upgrade by J.P. Morgan just a few days ago.
Now what
To be sure, analyst upgrades and downgrades don't have any effect on a company's business and don't change the long-term investment thesis. However, there are many investors who decide what stocks to buy and sell based on analyst opinions, and upgrades can certainly result in upward pressure in a stock's price as buyers rush in. And that's what we're seeing today.
