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On Friday, Barclays (LON:BARC) updated its outlook on Sea Ltd (NYSE:SE) shares, boosting the price target to $182.00 from the previous $148.00 while maintaining an Overweight rating. Currently trading at $139.15 with a market capitalization of $79.92 billion, Sea Ltd has demonstrated remarkable momentum, posting a 134.5% return over the past year. According to InvestingPro analysis, the stock is currently fairly valued based on its proprietary Fair Value model. The adjustment follows a robust fourth-quarter performance by the company, particularly in its e-commerce segment.
Sea Ltd’s e-commerce Gross Merchandise Value (GMV) for the fourth quarter surpassed Barclays’ expectations by 7.7%, showing a year-over-year increase of 23.5%. The company’s overall revenue growth reached 28.75% in the last twelve months, with a healthy gross profit margin of 42.84%. Even more notable was the e-commerce EBITDA, which was approximately 70% higher than the consensus, achieving an EBITDA to GMV margin of around 0.5%. Barclays highlighted that Sea Ltd’s management has set a long-term EBITDA/GMV margin target of 2-3%, which now seems increasingly attainable or potentially conservative.
The management at Sea Ltd has provided guidance for a 20% GMV growth for 2025, which exceeds the already optimistic high-teens growth projection by analysts. The strong fourth-quarter profits indicate that Sea Ltd’s Shopee business could be appreciating in value, especially in a stable competitive landscape.
Sea Ltd and TikTok Shop, its primary e-commerce competitor owned by ByteDance, have consistently increased take rates throughout 2024 and continue to do so this year as the industry stabilizes. Sea Ltd’s progress in advertising penetration among its sellers is also noteworthy, contributing to both revenue growth and margin expansion.
In addition to e-commerce, Sea Ltd’s digital financial services (DFS) business outperformed expectations in revenue and profits. The company’s management expects the 2025 loan book growth to significantly outpace the 20% GMV growth. The gaming segment also reported strong results, with fourth-quarter bookings aligning with optimistic forecasts, culminating in a 19% year-over-year booking growth for 2024. Furthermore, management anticipates double-digit booking growth for 2025, fueled by the sustained success of Free Fire and upcoming game releases. The company maintains strong financial health with more cash than debt on its balance sheet and sufficient liquidity to cover short-term obligations. For deeper insights into Sea Ltd’s financial health and growth prospects, InvestingPro subscribers have access to over 20 additional exclusive tips and comprehensive analysis through the Pro Research Report.
In other recent news, Sea Ltd has been the focus of several analyst updates following its impressive fourth-quarter earnings report. The company reported a 37% year-over-year revenue increase, primarily driven by its e-commerce platform Shopee and digital financial services arm SeaMoney, despite an investment loss affecting profit after tax. Phillip Securities upgraded Sea Ltd’s stock rating from Reduce to Neutral, setting a new price target of $140, reflecting confidence in the company’s growth momentum and monetization capabilities.
Benchmark analysts also adjusted their outlook, raising the price target to $150 and maintaining a Buy rating, citing Sea Ltd’s robust performance across all business segments and its optimistic guidance for 2025. TD Cowen increased its price target to $120 while keeping a Hold rating, noting Shopee’s strong growth but expressing cautious optimism due to Garena’s underperformance. Bernstein SocGen Group raised the price target to $145 and maintained an Outperform rating, highlighting Sea Ltd’s market share gains and fintech growth.
Jefferies took a positive stance by raising the price target to $157, maintaining a Buy rating, and emphasizing the strong performance and outlook of Shopee and Sea Ltd’s digital financial services. These developments indicate a general consensus among analysts on Sea Ltd’s promising growth trajectory and strategic market positioning.
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