On Wednesday, Sea Ltd (NYNYSE:SE:SE) received a revised price target from TD Cowen, increasing it to $100 from the previous $69, while the Hold rating on the stock remains unchanged. The adjustment follows Sea Ltd's third-quarter revenue outperformance, which saw a 7% increase over consensus, led by its Shopee platform's 7.5% revenue beat against expectations. The company's digital entertainment arm Garena also performed well, with bookings surpassing estimates by approximately 3%, supported by strong Average Revenue Per Paying User (ARPPU).
The e-commerce Gross Merchandise Value (GMV) experienced a slight deceleration but still managed to surpass TD Cowen's estimates by 2.4%. The EBITDA for the quarter stood at $555 million, which was 13% higher than the consensus. Management at Sea Ltd confirmed their guidance for fiscal year 2024, expecting Shopee's GMV to grow in the mid-20% range year-over-year.
The adjustment in Sea Ltd's price target reflects the updated revenue and EBITDA estimates by the analyst. The company's solid performance in the third quarter, particularly in its Shopee and Garena segments, has led to increased confidence in its financial outlook, warranting the higher price target while maintaining a neutral Hold rating on the stock.
In other recent news, Sea Ltd has shown significant growth in its third-quarter earnings. The company's revenue increased by 31% year-on-year to $4.3 billion, and its adjusted EBITDA rose to $521 million, a substantial increase from the previous year's $35 million. This growth was observed across all three of Sea Ltd's main business segments.
Morgan Stanley (NYSE:MS) and Barclays (LON:BARC) have both raised their price targets for Sea Ltd to $131, maintaining an Overweight rating. The upgrades come following Sea Ltd's strong third-quarter results, which showed robust revenue growth and a notable achievement of EBITDA break-even in its e-commerce segment.
Sea Ltd'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%.
InvestingPro Insights
Sea Ltd's recent performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's revenue growth remains strong, with a 22.97% increase in the most recent quarter. This aligns with the article's mention of Sea Ltd's revenue outperformance in Q3, particularly driven by its Shopee platform.
InvestingPro Tips reveal that Sea Ltd's net income is expected to grow this year, which could be a positive sign for investors considering the company's recent revenue beat. Additionally, the stock has shown a significant return over the last week, with InvestingPro data indicating a 12.88% price total return in the past week. This recent momentum may be related to the positive Q3 results and the revised price target from TD Cowen.
It's worth noting that Sea Ltd holds more cash than debt on its balance sheet, which could provide financial flexibility as the company continues to grow its e-commerce and digital entertainment segments. For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Sea Ltd, providing a deeper understanding of the company's financial health and market position.
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