Mixed Performance Leads to Hold Rating for Sea Ltd: Strong Garena Growth Offset by Shopee Challenges

Sea (SE – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst John Blackledge from TD Cowen maintained a Hold rating on the stock and has a $140.00 price target.

John Blackledge has given his Hold rating due to a combination of factors that reflect both positive and challenging aspects of Sea’s recent performance. The company’s first-quarter results were marked by significant growth in Garena bookings, which exceeded expectations and contributed to better-than-anticipated profitability. This was driven by an increase in paying users, particularly through the success of Free Fire, and management’s confidence in continued growth in this segment.
However, the performance of Shopee, Sea’s e-commerce arm, was slightly below expectations, with revenue missing estimates due to a lower-than-expected gross merchandise value. Despite this, Shopee’s EBITDA surpassed estimates, aided by cost optimizations and improved monetization strategies. While management remains optimistic about future growth and profitability, the mixed results across different segments suggest a balanced outlook, leading to the Hold rating.

In another report released on May 9, Bank of America Securities also downgraded the stock to a Hold with a $160.00 price target.