MercadoLibre Upgraded by RBC

MercadoLibre (MELI) shares are higher Monday morning after RBC Capital’s Jordan Rohan raised his rating on the stock to Outperform from Sector Perform. “Investors will struggle to find another growth story as compelling as MELI on the Internet, and valuation is now more reasonable,” he writes. (The stock is down more than 50% since late 2007.)

Rohan notes that the eBay-like, Latin America-focused online auctions company is getting ready to roll out MercadoPago, its online payment service, in Argentina and Brazil, and that it has seen more favorable than expected results from trials in Chile and Colombia. Meanwhile, he said that fourth quarter margin compression at the company “was largely discretionary.” He says the company is experimenting with various promotional activities, so that “margins could compress in any given quarter,” but that long-term expansions to eBay-like levels is still reasonable.

Rohan adjusted estimates for the company. For Q4 2007, he goes to 10 cents, from 12 cents. For 2008, he’s now at 60 cents, from 61 cents; but for ‘09, he goes to 99 cents, from 98 cents. His price target ticks up to $43 from $42.

MELI Monday morning is up $1.42, or 4%, at $37.58.