Sea, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Kenneth TAN from CGS-CIMB upgraded the rating on the stock to a Buy and gave it a $185.00 price target.
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Kenneth TAN has given his Buy rating due to a combination of factors that highlight Sea’s potential for long-term growth. One of the primary reasons is the reinvestment phase that Shopee, Sea’s e-commerce segment, has entered. This phase focuses on enhancing logistics and maintaining market share in competitive regions like Southeast Asia and Brazil, despite the potential for short-term margin pressure. The reinvestment is expected to lead to positive year-over-year EBITDA growth, which supports the long-term growth outlook.
Kenneth TAN also notes the healthy expansion of Monee’s loan portfolio, particularly in Malaysia and Thailand, which reflects a strategic diversification of product offerings. Although this rapid expansion might compress margins due to promotional spending, it broadens the customer base and supports future growth. Additionally, the gaming segment, Garena, continues to show strong booking revenue growth, driven by popular game launches and regional events. These factors, combined with the potential for margin improvement in the coming years, justify the Buy rating, despite short-term share price volatility.
According to TipRanks, TAN is ranked #711 out of 10041 analysts.
In another report released yesterday, Morgan Stanley also maintained a Buy rating on the stock with a $209.00 price target.