BofA Securities analyst Sachin Salgaonkar reiterated the Buy rating on Sea Limited (NYSE:SE), raising the price objective to $84 from $77.
Yesterday, the company reported fiscal second-quarter revenue growth of 23.0% year-on-year to $3.81 billion, beating the analyst consensus estimate of $3.72 billion.
Following the results, the analyst revised the FY24/25 EPS estimates and adjusted the target multiples for gaming to 6.5X FY25E EV/EBITDA, up from 5.5X.
The analyst notes that the company is well-positioned to benefit from the e-commerce boom in Southeast Asia, thanks to its dominant online marketplace, Shopee.
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For Shopee, the analyst revised the target multiples to 0.28X FY25E EV/GMV, up from 0.25X, to account for improved business momentum.
Additionally, its expansion into Brazil presents further long-term growth opportunities.
The analyst anticipates stable competition trends in the region and expects improvements in take rates.
According to the analyst, e-commerce business losses have reached their lowest point, the gaming business shows signs of a turnaround, and profitability is improving in the fintech sector.
The company sees room for e-com take rates to go up, both on commission fee as well as ads.
Ad benefits would likely be visible in next few quarters, the analyst writes.
The analyst lowered the FY24 EPS estimate to $0.84 from $0.96.
Price Action: SE shares are trading higher by 2.59% to $76.79 at last check Tuesday.
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