On Wednesday, Benchmark raised its price target on Sea Ltd (NYNYSE::SE) to $94 from $87, maintaining a buy rating on the stock. This adjustment follows Sea Ltd's announcement of strong results for the second quarter of 2024, which exceeded market expectations for both revenue and profit.
The company's recent confirmation of a stable and reasonable competitive environment in its operating environment has helped alleviate concerns about unexpected growth and revenue potential.
E-commerce platform Shopee, one of Sea Ltd's core services, has raised its guidance for the full year, indicating greater confidence and clear business prospects. This review is a testament to the company's improved performance and vision.
Additionally, Garena, Sea Ltd's games development and publishing arm, has shown a significant return to growth with bookings up 21% year-on-year.
The continued growth of Sea Ltd's digital financial services (DFS) also contributes to the positive outlook. With these developments, Benchmark expects Sea Ltd's consensus ratings to be revised upwards following the quarter's results.
In a statement, the analyst noted the importance of recent results and implications for Sea Ltd's future direction. “SE reported strong 2Q24 results with both revenue and profit ahead of expectations.
More importantly, the management's confirmation of a stable and balanced competitive situation in the region helps to alleviate the fear in the markets of the overtime of unexpected growth and profits,” said the analyst.
“Shopee's raised FY guidance also reflected improved confidence and improved visibility. With Garena back on a strong track (+21% year-over-year) and healthy growth for DFS, we expect consensus to reset post high Q. . We re-rate our Buy and raised our PT to $94 to reflect our upward revisions.”
The price target increase reflects Benchmark's positive reassessment of Sea Ltd's earnings and market conditions following recent financial disclosures.
In other recent news, Sea Ltd has been the subject of a positive financial development. BofA Securities raised its price target on Sea Ltd to $84, based on the company's successful cost controls and earnings comparisons. S
e Ltd's e-commerce platform, Shopee, reported a 29% year-on-year increase in Gross Merchandise Value (GMV) in the second quarter, to $23.3 billion.
Management at Sea Ltd expects Shopee to reach an adjusted EBITDA breakeven in the third quarter and projects mid-range growth of 20% in GMV in fiscal year 2024.
In addition, Sea Ltd reported strong growth across all segments in its second quarter of 2024, with GAAP revenue up 23% year over year to $3.8 billion, and adjusted EBITDA to $448 million.
However, the gaming company's revenue fell 5% quarter over quarter. Apart from this, BofA Securities revised its FY24/25E EPS forecast for Sea Ltd and increased the target multiple for the sports segment, indicating improved momentum in the Sea business.
These are the latest developments for Sea Ltd, which continues to demonstrate strong performance and strategic growth across its diverse portfolio. SeaMoney's loan book and profit grew 40% year-on-year, while non-performing loans remained strong.
The company's digital entertainment division, Garena's Free Fire, maintained strong growth with more than 100 million daily active users in Q2 2024. However, Sea Ltd reported a drop in Q2 2024 revenue to $80 million, down from $331 million in Q2 2023.
InvestingPro Insights
Following analysis by Benchmark, current data from InvestingPro supports a strong view of Sea Ltd (NYSE:SE). The company's market capitalization reaches $42.99 billion, indicating a strong presence in the market. Although Sea Ltd trades at multiple earnings, with a P/E ratio of 1175.91, the adjusted P/E ratio for the last twelve months from Q1 2024 is very low at 364.28, suggesting that investors are expecting an improvement. Additionally, the company's revenue growth over the past twelve months from Q1 2024 was 9.26%, with an impressive quarterly revenue growth of 22.8% in Q1 2024, indicating Sea Ltd's ability to increase its top performance.
InvestingPro Tips highlights that Sea Ltd has more cash than debt, which is a reassuring sign of financial stability, and analysts have revised their earnings upward for the future, indicating optimism for the company's growth. The company's significant return this past week of 23.25% is in line with the positive outlook of the Benchmark and may attract investors' attention. For those looking for a more detailed analysis, there are additional InvestingPro Tips available from InvestingPro Sea Ltd that can provide in-depth information on Sea Ltd's financial health and market dynamics.
These details and metrics underscore the rationale for Benchmark's proposed price target and reiterate confidence in Sea Ltd's future performance. With the company trading near its 52-week high and analysts predicting a profit this year, Sea Ltd's prospects look promising.
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