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On Wednesday, TD Cowen showed confidence in Sea Ltd (NYSE:SE) by increasing its price target to $140.00, up from the previous $120.00, while keeping a Hold rating on the stock. The company, currently valued at $91.25 billion, has seen its stock surge 45.27% year-to-date, according to InvestingPro data. The firm’s decision followed Sea Ltd’s strong first-quarter results, which were primarily driven by a significant uptick in Garena’s bookings and overall earnings before interest, taxes, depreciation, and amortization (EBITDA).
Garena, the digital entertainment arm of Sea Ltd, saw bookings surge by 73% year-over-year, outperforming TD Cowen’s estimates by 38%. This growth was attributed to the increased number of paying users for its popular game Free Fire. Despite Shopee, Sea’s e-commerce platform, reporting revenue that was 3% below consensus estimates, the company’s financial technology segment, Monee, experienced a robust 67% year-over-year revenue growth, surpassing expectations by 6%. Overall company revenue grew 30.31% year-over-year, with InvestingPro analysis showing a GREAT financial health score of 3.18/5.
The overall EBITDA for Sea Ltd in the first quarter exceeded consensus estimates by 33%, largely due to improved profitability in both the Garena and Shopee segments. Management at Sea Ltd expressed confidence in meeting the segment level guidance for 2025. As a result, TD Cowen has revised its long-term revenue and EBITDA estimates for the company, which contributed to the new price target of $140 while maintaining a Hold rating.
The analyst from TD Cowen remarked on the company’s performance, stating, "Solid 1Q Results on Garena Bookings Growth & EBITDA Gains; 1Q results were led by Garena bookings +73% y/y, +38% vs our est. and driven by Free Fire paying users. Shopee rev was 3% below cons. est., while Monee rev grew 67% y/y, 6% ahead of cons. 1Q overall EBITDA was +33% vs cons. est’s, largely on better Garena & Shopee profitability. Mgmt remains confident in segment level guide for ’25. We raised L-T rev & EBITDA est’s; PT to $140, maintain Hold."
Investors may watch Sea Ltd’s stock performance closely as the company continues to navigate its various business segments, with particular attention to Garena’s sustained growth and the overall profitability that could influence future ratings and price targets. With analyst price targets ranging from $135 to $204, InvestingPro subscribers can access 18 additional key insights and a comprehensive Pro Research Report, helping them make more informed investment decisions about this rapidly growing entertainment industry leader.
In other recent news, Sea Ltd has garnered attention with its impressive financial results and analyst reactions. The company reported strong first-quarter performance, with its e-commerce platform Shopee showing a Gross Merchandise Value (GMV) growth of 21.5% year-over-year and an EBITDA margin of 0.9% of GMV. Barclays (LON:BARC) highlighted Shopee’s unexpected margin expansion and profit growth, prompting the firm to raise its price target for Sea Ltd to $200. JPMorgan also upgraded Sea Ltd’s stock rating to Overweight, increasing the price target to $190, citing Shopee’s cost competitiveness and margin expansion as key factors.
Meanwhile, Sea Ltd’s financial technology segment, now branded as Monee, is expanding its banking services in the ASEAN region, further diversifying the company’s revenue streams. The gaming division, Garena, reported a significant year-over-year bookings growth of over 50%, surpassing expectations. Bernstein SocGen raised the price target for Sea Ltd to $170, maintaining an Outperform rating, due to the company’s growth across multiple segments.
However, not all analysts shared the same optimism. BofA Securities downgraded Sea Ltd’s stock rating to Neutral with a price target of $160, citing a more balanced risk-reward scenario after substantial stock gains. Despite this, BofA acknowledged Sea Ltd’s robust fundamentals and projected growth across its business segments. These developments indicate a varied analyst outlook, reflecting both confidence in Sea Ltd’s strategic positioning and caution regarding future growth potential.
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