JPMorgan raises Sea Ltd stock rating, price target to $190

On Tuesday, JPMorgan upgraded Sea Ltd (NYSE:SE) stock from Neutral to Overweight, significantly raising the price target to $190 from the previous $135. The firm’s analysts cited stronger ecommerce growth with potential margin expansion as the primary reasons for the optimistic outlook. The upgrade comes as Sea Ltd’s stock has shown remarkable momentum, delivering a 121% return over the past year and trading near its 52-week high. According to InvestingPro data, analyst targets currently range from $120 to $182, with the company receiving a GREAT financial health score of 3.12 out of 5.

Sea Ltd’s first quarter results for 2025 revealed a notable increase in EBITDA margin to 0.9% of GMV, with a year-over-year GMV growth of 21%, which is believed to have surpassed overall market growth. The company’s logistics costs per order in Asia saw a further reduction of 6% year-over-year, despite enhancements in service quality and broader coverage. With a robust gross profit margin of 42.84% and impressive revenue growth of 28.75% in the last twelve months, Sea Ltd continues to demonstrate strong operational efficiency. InvestingPro subscribers can access 18 additional key insights about Sea Ltd’s performance and growth potential through the platform’s comprehensive Pro Research Report. JPMorgan views these reductions as a strategic advantage for Shopee, Sea Ltd’s ecommerce platform, enhancing its cost competitiveness and aiding in margin expansion as the proportion of effective subsidies to GMV declines.

Additionally, advertising revenue growth exceeded 50% year-over-year, reflecting increased spending by a larger number of sellers. This growth in ad spend underscores Shopee’s value proposition to both sellers and buyers, contributing to the platform’s growth and generating high-margin revenues.

The analyst report also highlighted the potential for Sea Ltd’s fintech services to sustain profitable growth, driven by the targeting of prime customers. With a robust 16% quarter-over-quarter growth in the company’s gross loan book and a 14% increase in adjusted EBITDA, despite higher credit costs, the company’s financial services segment appears poised for expansion. New products with lower interest rates, higher credit limits, and longer tenures are being introduced to attract prime customers, which could reduce credit risk.

In the gaming segment, a collaboration with Naruto in January 2025 resulted in a surge in gaming revenues and EBITDA, with daily active users for the game Free Fire nearing peak levels seen during the COVID period. Although gaming bookings may decline quarter-over-quarter, the success of this collaboration suggests a strong content pipeline for Garena, Sea Ltd’s digital entertainment arm.

In light of these developments, JPMorgan has increased its FY25/26E segment adjusted EBITDA forecasts for Sea Ltd by 27% and 31%, respectively. The raised price target reflects higher earnings expectations and increased EBITDA multiples for the ecommerce and fintech segments. The new valuation takes into account an increase in reported diluted shares to 635 million. With a current market capitalization of $84.33 billion and a P/E ratio of 162.77, Sea Ltd trades at premium multiples, reflecting high growth expectations. For detailed valuation analysis and future growth projections, investors can access Sea Ltd’s complete financial health assessment through InvestingPro’s advanced analytics tools.

In other recent news, Sea Ltd has been the subject of various analyst reports, reflecting a range of perspectives on its financial outlook. BofA Securities downgraded Sea Ltd’s stock rating from Buy to Neutral, setting a price target of $160. This decision was based on the company’s significant growth, with analysts projecting robust year-on-year growth in its e-commerce, gaming, and digital financial services segments. Meanwhile, JPMorgan also downgraded Sea Ltd from Overweight to Neutral, lowering the price target to $135 due to concerns about macroeconomic challenges and reduced growth expectations in certain segments.

In contrast, Morgan Stanley (NYSE:MS) maintained an Overweight rating with a $167 price target, citing strong performance driven by its Digital Entertainment and E-commerce segments and projecting significant growth in its Digital Financial Services. Loop Capital Markets raised their price target to $165, maintaining a Buy rating, and expressed confidence in Sea Ltd’s long-term earnings potential and its strong position in e-commerce across Southeast Asia. These recent developments underscore the varied analyst outlooks regarding Sea Ltd’s future performance amid a challenging economic environment.

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