On Monday, Citi has adjusted its price target for Sea Ltd (NYSE:SE), a leading global consumer internet company, reducing it slightly from $81.00 to $80.00, while still retaining a Buy rating on the stock. The firm anticipates Sea to announce its second-quarter earnings for 2024 around mid-August.
The revision follows a period of strong Chinese New Year and Ramadan promotions in the first quarter, which is expected to give way to softer seasonality in the second quarter. Citi projects a 3% quarter-over-quarter decrease in Shopee's Gross Merchandise Value (GMV), equating to a 24% year-over-year increase to $22.94 billion. Revenue is expected to grow 27% year-over-year to $2.68 billion, with an adjusted EBITDA loss improving to -$10.8 million.
The analyst from Citi noted that due to anniversary promotions, the company's digital entertainment arm, Garena, is likely to experience improved momentum in bookings and EBITDA margin, particularly towards the June and July period.
Looking ahead to the third quarter and second half of 2024, while Shopee's GMV and market share are expected to remain stable, the analyst predicts increased competition in Brazil and a potential escalation in promotional subsidies by competitors in ASEAN markets. Despite these challenges, Shopee is still forecasted to achieve EBITDA profitability by the third quarter of 2024.
The slight adjustment in the price target to $80 reflects these updated estimates, as stated by the analyst, who reaffirms the Buy rating on Sea Ltd shares.
In other recent news, Sea Ltd has been the subject of multiple financial evaluations and revisions from leading analyst firms.
BofA Securities has raised the price target for Sea Ltd to $77, maintaining a Buy rating, while expecting the company's revenue to reach $3.8 billion, marking a 23% increase. On the other hand, JPMorgan has downgraded Sea Ltd from Overweight to Neutral, adjusting the price target to $78, citing the stock's significant rally and growing competition in the e-commerce sector.
Loop Capital has also increased its price target for Sea Ltd to $94, echoing BofA's confidence in the company's prospects. Meanwhile, Jefferies has maintained a Buy rating and a $89.00 price target for the company's stock, anticipating steady performance across Sea Ltd's various business segments.
These recent developments provide valuable insights into Sea Ltd's performance and prospects. The company's first-quarter earnings revealed a mixed performance, with Shopee's revenue surpassing expectations by 6%, while Garena fell short by 9%. Despite this, the company's EBITDA for the quarter significantly exceeded consensus estimates.
Sea Ltd is also facing an antitrust case in Indonesia, involving allegations of anti-competitive practices by favoring its delivery service, Shopee Xpress. However, despite these challenges, Morgan Stanley maintains its Overweight rating on Sea Ltd. (NYSE:SE) shares, suggesting a limited impact due to Shopee's improved cost structure.
InvestingPro Insights
As Sea Ltd (NYSE:SE) approaches its second-quarter earnings report for 2024, a closer look at real-time data and InvestingPro Tips can provide investors with a deeper understanding of the company's financial health and market position. With a significant market capitalization of $39.26 billion and a robust revenue growth of 22.8% in Q1 2024, Sea Ltd demonstrates a strong capacity for expansion in its sector. Despite trading at a high earnings multiple, with a P/E ratio of 1698.55, the company's net income is expected to grow this year, underpinning the positive outlook shared by analysts.
Investors may take note of the company's impressive six-month price total return of 83.98%, indicating a substantial appreciation in investor confidence and market valuation. Additionally, Sea Ltd's liquid assets surpass its short-term obligations, providing a cushion for operational flexibility and potential investments. With these metrics in mind, coupled with the InvestingPro Tips that highlight the company's cash position and anticipated profitability, Sea Ltd appears poised to navigate the competitive landscape effectively.
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