Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, Bernstein SocGen Group maintained an Outperform rating on Sea Ltd (NYSE:SE) with a $130.00 price target. The research firm highlighted the company’s solid fourth-quarter performance in operational metrics and anticipates that management will continue to prioritize growth throughout the year. According to InvestingPro data, Sea Ltd has demonstrated strong momentum with a 20% revenue growth over the last twelve months and currently commands a market capitalization of $71.2 billion. According to the analyst, Sea Ltd’s e-commerce profitability is expected to surpass consensus estimates, while its gaming and fintech segments may experience sequential margin declines due to various factors such as product mix and seasonality. However, these declines are projected to align with expectations.
The analyst noted that foreign exchange (FX) translation could impact this quarter’s results. The complexity of forecasting Net Income arises from FX impacts, investment loss provisions, and non-cash employee stock ownership plan (ESOP) expenses. Current Street models suggest a steeper quarter-over-quarter increase in net income compared to EBITDA, which may pose a risk unless non-cash item forecasts are accurate. Bernstein’s projections for Net Income are below consensus, but the firm believes that a potential miss on consensus estimates would not be alarming, as it would likely stem from non-cash items.
Sea Ltd has reportedly achieved commendable stock returns this year, and Bernstein sees potential catalysts that could sustain this upward trajectory. While the direction of the stock’s movement post-results remains uncertain—attributed often to short-term narratives and difficult to predict—the analyst reaffirmed that Q4 was robust and management’s confidence is expected to persist. InvestingPro data reveals an impressive 174% return over the past year, with 14 additional ProTips available to subscribers, including insights on the company’s financial health and valuation metrics.
In other recent news, Sea Ltd has been the focus of several analyst evaluations and strategic developments. Barclays (LON:BARC) has maintained an Overweight rating with a $148 price target, citing the significant year-over-year growth in Sea Ltd’s Digital Financial Services (DFS) segment, which increased by 38% in the third quarter of 2024. This growth is expected to accelerate further into the fourth quarter of 2024 and 2025. Meanwhile, Bernstein reiterated an Outperform rating with a $130 price target, highlighting Sea Ltd’s use of discounting strategies in collaboration with TikTok Shop to drive growth, which could strengthen EBITDA despite potential challenges in meeting near-term estimates.
BofA Securities has also kept a Buy rating on Sea Ltd with a $134 target, noting the substantial contribution of the game Free Fire to Garena’s EBITDA and the company’s efforts to diversify its gaming portfolio. This strategic diversification aims to reduce reliance on a single title and bolster the gaming division’s offerings. In a separate development, Grab Holdings (NASDAQ:GRAB) is expected to benefit from Singapore’s new tax policy changes, which include a 50% rebate on corporate taxes, capped at S$40,000. This policy is part of Singapore’s 2025 budget, which forecasts a fiscal surplus and includes measures to support the economy.
The government’s fiscal strategy, including the tax rebate, appears to be advantageous for Grab as it works towards profitability. Additionally, Sea Ltd’s stock has been positively evaluated by multiple analyst firms, reflecting confidence in its strategic initiatives across various segments. These developments underscore the evolving landscape for both Sea Ltd and Grab Holdings as they navigate growth opportunities and fiscal policies in their respective markets.
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