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On Friday, Phillip Securities analyst Helena Wang upgraded Sea Ltd (NYSE:SE) stock from Reduce to Neutral and raised the price target from $100 to $140. The upgrade followed the company’s fourth-quarter earnings report, which showed a 37% year-over-year revenue increase, driven largely by its e-commerce platform Shopee, with 41% growth, and its digital financial services arm SeaMoney, with a 55% increase. According to InvestingPro data, SE has demonstrated remarkable momentum with a 134.5% return over the past year and currently commands a market capitalization of $79.92 billion.
Sea Ltd’s profit after tax and minority interest (PATMI) fell short of expectations due to an investment loss of $250 million. However, excluding this loss, the company’s full-year revenue and PATMI for 2024 reached 103% and 98%, respectively, of Phillip Securities’ estimates. The strong performance of Shopee and SeaMoney was attributed to increased take rates in commissions and advertisements, as well as significant growth in the loan book. InvestingPro analysis reveals the company maintains robust financial health with more cash than debt on its balance sheet and strong liquidity metrics, with current assets exceeding short-term obligations by 1.49x.
While Garena, Sea Ltd’s digital entertainment division, continued to show positive metrics, its contribution to the company’s overall top and bottom-line growth was not as substantial as anticipated. Despite this, the firm’s decision to upgrade the stock rating was influenced by Sea Ltd’s demonstrated ability to sustain growth momentum and monetize its services effectively. The company has maintained impressive revenue growth of 28.75% over the last twelve months, with InvestingPro analysts forecasting continued profitability this year.
The new discounted cash flow (DCF) target price of $140 reflects the analyst’s confidence in Sea Ltd’s continued strong performance, underpinned by a steady terminal growth rate of 4% and a weighted average cost of capital (WACC) of 7.6%. The report acknowledged Sea Ltd’s robust growth and monetization capabilities, particularly within Shopee and SeaMoney, while also noting that the recent strength in the company’s share price may limit further valuation upside. Trading at a P/E ratio of 178.8x, investors seeking deeper insights can access comprehensive valuation analysis and 21 additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Sea Ltd reported a significant increase in revenue and profitability for the fourth quarter of 2024, with a 37% year-over-year rise in revenue to $5 billion. The company’s full-year revenue for 2024 reached $16.8 billion, reflecting strong growth in its e-commerce and digital entertainment segments. Sea Ltd’s Shopee platform achieved a Gross Merchandise Value (GMV) of over $100 billion for the first time, highlighting its strong market presence. The company’s digital financial services arm, SeaMoney, also demonstrated significant growth with a loan book size surpassing $5 billion. Analysts from several firms have responded positively to these results; Jefferies raised Sea Ltd’s price target to $157, while Benchmark increased it to $150, both maintaining a Buy rating. Bernstein SocGen Group also raised their price target to $145, citing impressive performance and growth potential in the fintech segment. TD Cowen adjusted its price target to $120, maintaining a Hold rating, noting the strong performance of Shopee despite some underperformance in the gaming division. These developments underscore Sea Ltd’s robust financial health and strategic positioning in the market.
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