On Tuesday, Morgan Stanley (NYSE:MS) reaffirmed its confidence in Sea Ltd (NYNYSE:SE: SE), maintaining an Overweight rating and a price target of $140.00. The stock has shown remarkable momentum, delivering a 179.6% return year-to-date and currently commands a market capitalization of $65 billion.
According to InvestingPro data, Sea Ltd is trading near its 52-week high of $117.85, reflecting strong investor confidence. The firm's analysis highlighted the robust performance of Sea's digital entertainment segment, particularly the game Free Fire, which saw a year-over-year revenue increase of 36%. Additionally, the company's monthly active users (MAUs) experienced a 6% year-over-year growth.
The recent launch of NFS Mobile on October 31st garnered 400,000 downloads in November, indicating the company's ongoing expansion in the gaming sector. This growth contributes to Sea's overall revenue increase of 20.06% over the last twelve months, with InvestingPro analysis showing strong financial health metrics and a "GOOD" overall financial health rating.
Furthermore, the anticipated release of Delta Force later this week is expected to continue the momentum. In the e-commerce domain, Sea's platform Shopee has shown consistent growth in MAUs, marking a 6% year-over-year increase in the ASEAN region and an impressive 20% in Brazil. Despite a 25% year-over-year decline in downloads, Shopee has seen a month-over-month uptick of 4%.
However, not all metrics show an upward trajectory. Temu, another e-commerce platform under Sea, has seen its MAU growth plateau in Malaysia and the Philippines, with slight month-over-month declines of 2-4% in November. In Thailand, Temu's MAUs decreased by 7% month-over-month.
In response to market changes, TikTok has adjusted its marketplace commission rates in Thailand, effective January 2025, increasing them by 110 basis points for Fashion and Electronics categories. In parallel, Shopee has made adjustments to its Mall rates in the Philippines and Indonesia for the upcoming year.
Morgan Stanley's analysis concluded that Sea Ltd remains their preferred e-commerce play in Asia. The firm cited Sea's positive growth momentum and an improving track record of execution as key drivers that should continue to propel the company's stock price forward.
With a strong analyst consensus rating of 1.55 (where 1 is Strong Buy) and price targets ranging from $29 to $159, Sea Ltd presents an interesting investment opportunity. For deeper insights into Sea Ltd's valuation and growth prospects, including 18 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Sea Ltd has been the focus of several analyst adjustments following its robust third-quarter earnings report. The company's revenue rose by 31% year-on-year to $4.3 billion, and its adjusted EBITDA increased to $521 million. The growth was observed across all three of Sea Ltd's main business segments.
Phillip Securities downgraded Sea Ltd's stock rating from Neutral to Reduce, despite increasing the price target to $100. The firm's analysts revised their forecast for the fiscal year 2024 earnings and revenue, raising them by 4% and 1% respectively. This revision was due to stronger-than-expected growth in two of Sea Ltd's segments, Shopee and SeaMoney.
In contrast, TD Cowen, Morgan Stanley, and Barclays (LON:BARC) all raised their price targets for Sea Ltd following the company's strong performance. TD Cowen increased the target to $100, while both Morgan Stanley and Barclays raised their targets to $131.
Sea Ltd's digital entertainment arm Garena and its Shopee platform both outperformed expectations, contributing to the revenue increase. The company's digital financial services business also displayed significant growth, with revenue growth jumping from 21% in the second quarter to 38% in the third quarter. The loan book growth in the same segment surged from 40% to over 70%, while maintaining a low non-performing loan ratio of 1.2%.
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