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On Wednesday, Morgan Stanley (NYSE:MS) reaffirmed its confidence in Sea Ltd (NYSE:SE), maintaining an Overweight stock rating and a price target of $167.00. The company, currently valued at nearly $69 billion, has demonstrated strong momentum with a 112% return over the past year. According to InvestingPro data, Sea Ltd maintains a "GOOD" overall financial health score, with particularly strong metrics in growth and cash flow management. InvestingPro subscribers have access to 17 additional key insights about Sea Ltd, along with comprehensive financial analysis. The firm’s first-quarter adjusted EBITDA prediction of $710 million surpasses the Bloomberg consensus of $644 million and Visible Alpha’s estimate of $692 million. Sea Ltd’s performance is primarily fueled by its Digital Entertainment and E-commerce (EC) segments. The company’s last twelve months EBITDA stands at $1.05 billion, with a robust revenue growth of 29% year-over-year. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, making it an interesting watch for investors seeking detailed valuation insights.
The analysts at Morgan Stanley anticipate a 21% year-over-year growth in EC Gross Merchandise Value (GMV). Despite a quarterly flat GMV, attributed to seasonality, enhancements in user experience and cost efficiencies are expected to lead to a quarter-over-quarter improvement in EC EBITDA. Digital Financial Services (DFS) is projected to continue its robust growth trajectory, with a 50% year-over-year increase in revenue and a 55% rise in adjusted EBITDA, propelled by an expanding loan book.
Morgan Stanley does not foresee any changes in guidance but is attentive to management’s strategy in light of potential macroeconomic challenges. Sea Ltd is regarded as the firm’s top choice within the ASEAN Internet/Consumer and Asian EC sectors, with expectations of continued strong execution, leading to over 60% growth in EBITDA by 2025 and subsequent stock outperformance. The company’s strong position is reflected in its analyst consensus, with a notably bullish rating of 1.44 (where 1 is Strong Buy). Investors can access Sea Ltd’s comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks, for deeper insights into the company’s growth trajectory and market position.
In the gaming division, Garena’s Free Fire maintained its strong growth into the first quarter of 2025, with a 35% year-over-year revenue increase, partly driven by successful collaborations, such as with the popular Naruto IP. Morgan Stanley predicts a 13.4% year-over-year growth in gross bookings, higher than the consensus, and a 15% increase in EBITDA to $337 million, which is 7-8% above consensus figures.
Looking ahead, Garena is set to release the mobile version of Delta Force on April 22, 2025, in ASEAN, Latin America, and MENA regions. Investors should note that Sea Ltd’s next earnings report is scheduled for May 20, 2025, where the company is expected to demonstrate continued profitability, with analysts forecasting EPS of $4.32 for FY2025. The successful launch of Delta Force, along with potential new self-developed games like Free City, which was test-marketed in Argentina in December 2024, could provide additional upside for the latter half of the year.
In other recent news, Sea Ltd has seen a series of updates from various financial analysts, reflecting differing views on the company’s future prospects. UBS raised its price target for Sea Ltd to $176, citing strong fourth-quarter results and promising guidance for 2025, particularly in the e-commerce and Fintech sectors. Barclays (LON:BARC) followed suit, increasing their target to $182, highlighting the company’s impressive e-commerce performance and potential for long-term growth in EBITDA margins. Loop Capital also expressed optimism by raising their target to $165, emphasizing Sea Ltd’s market position and long-term earnings potential across all business segments.
Conversely, JPMorgan took a more cautious stance, downgrading Sea Ltd’s stock from Overweight to Neutral and lowering the price target to $135. The downgrade was attributed to macroeconomic concerns and potential challenges in increasing seller commissions. Meanwhile, Phillip Securities upgraded Sea Ltd’s stock rating to Neutral and set a new price target of $140, acknowledging the company’s robust revenue growth in its e-commerce and digital financial services segments, despite a notable investment loss.
These developments underscore the varied perspectives on Sea Ltd’s outlook, with some analysts focusing on strong recent performances and growth opportunities, while others highlight potential risks and market uncertainties.
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