Sea Limited to Benefit from Strong E-Commerce Growth and Positive Momentum: Analyst – Sea (NYSE:SE)

BofA Securities Analyst Sachin Salgaonkar reiterated Buy rating The Sea Limited South-Eastraising the target price from $77 to $84.

Yesterday, the company announced fiscal second-quarter revenue growth of 23.0% year-over-year to $3.81 billion. That was better than analysts’ consensus of $3.72 billion.

Following the results, the analyst revised earnings per share estimates for FY2024/2025 and adjusted target multiples for games from 5.5X to 6.5X EV/EBITDA for FY2025.

The analyst notes that the company is well-positioned to benefit from the e-commerce boom in Southeast Asia, thanks to dominant online marketplace Shopee.

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For Shopee, the analyst revised the fiscal year 2025 target multiples from 0.25X to 0.28X EV/GMV to account for improving business momentum.

Additionally, expansion into the Brazilian market creates further opportunities for long-term growth.

The analyst predicts a stabilization of competitive trends in the region and expects improved admission rates.

According to the analyst, losses in the e-commerce industry have reached their lowest level, the gaming industry is showing signs of improvement, and profitability is improving in the financial technology sector.

The company anticipates possible increases in online sales rates, both commissions and advertising fees.

The analyst writes that the benefits of the ads will likely be visible within the next few quarters.

The analyst lowered his fiscal 2024 earnings per share forecast from $0.96 to $0.84.

Price action: SE shares were up 2.59% at $76.79, as of last check on Tuesday.

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