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On Tuesday, Barclays (LON:BARC) maintained a positive outlook on Sea Ltd (NYSE:SE) shares, reiterating an Overweight rating and a price target of $148.00. According to InvestingPro data, the company’s stock has delivered an impressive 182% return over the past year, though it recently experienced an 8.25% decline in the past week. With a market capitalization of $77.5 billion, Sea Ltd maintains a strong financial position, holding more cash than debt on its balance sheet. The firm’s confidence in the company’s prospects is rooted in the expected acceleration of Digital Financial Services (DFS) growth in the fourth quarter of 2024 and into 2025.
Sea Ltd’s DFS segment experienced a significant increase in year-over-year growth, jumping to 38% in the third quarter of 2024, up from the low twenties in prior quarters. This trend was bolstered by a robust 70% year-over-year growth in the company’s loan book during the same period. The company’s overall revenue growth stands at 20%, with analysts expecting continued profitability this year. For deeper insights into Sea Ltd’s growth metrics and 16 additional exclusive ProTips, consider exploring InvestingPro. Barclays anticipates further revenue growth acceleration in DFS for the fourth quarter of 2024.
The company has been focusing on expanding its financial product offerings to a larger portion of its substantial e-commerce customer base. Barclays highlighted Sea Ltd’s strategic efforts over the past few years to build a solid DFS foundation, which now seems poised to enter a phase of accelerated growth.
In addition to the Buy Now Pay Later (BNPL) services initially offered on the platform, Sea Ltd has significantly expanded into off-platform cash loans, which currently account for about half of the DFS business. The potential market for these off-platform services is considered to be substantially larger, given the high percentage of unbanked or underbanked consumers in Southeast Asia.
In light of the accelerating growth, Barclays has increased its valuation multiple for Sea Ltd’s DFS business to 20 times EBITDA, up from the low teens. This adjustment contributes to the firm’s higher price target for Sea Ltd’s stock. Based on current InvestingPro metrics, Sea Ltd trades at high earnings and EBITDA multiples, with analyst targets ranging from $29 to $160. The company’s next earnings report is scheduled for March 4, 2025, which could provide further clarity on its growth trajectory. Get access to Sea Ltd’s comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks, for detailed valuation analysis and expert insights.
In other recent news, Grab Holdings (NASDAQ:GRAB) is expected to benefit from Singapore’s new tax policy changes, which were announced as part of the city-state’s budget. The budget forecasts a fiscal surplus and includes a 50% rebate on corporate taxes, capped at S$40,000, which analysts believe Grab could utilize. This development comes amid expectations that Grab may incur a S$71 million tax expense on an estimated S$322 million of pretax profit in 2025. Meanwhile, Sea Ltd has received positive attention from analysts at Bernstein and BofA Securities. Bernstein maintained an Outperform rating with a $130 price target, highlighting strategic discounting and spending efficiency in its e-commerce segment. BofA Securities reiterated a Buy rating with a $134 target, noting Sea Ltd’s diversification efforts in its gaming division and financial stability. Additionally, Serina Therapeutics announced the expansion of its Equity Incentive Plan, increasing the number of shares reserved for issuance and introducing an automatic annual increase. Shareholders also elected directors and ratified the appointment of a new accounting firm during the company’s Annual Meeting.
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