Citi Upgrades Sea Ltd. (SE) to Buy, 'Shopee Loss Ratio Slightly Narrows'

Citi analyst Alicia Yap upgraded Sea Ltd. (NYSE: SE) from Neutral to Buy with a price target of $50.00 (from $44.00).

The analyst comments "We expect Sea to report 4Q23 at end-Feb/early-Mar. As Sea navigates varying headwinds in a changing ecommerce competitive landscape in 4Q23, some uncertainty remains about whether TikTok could step up spending following the full integration with Toko app in the weeks ahead of the Hari Raya promotional campaign, which could prompt Shopee to react. We could see an inflection point in coming months if Shopee successfully maintains its leading position via diligent spending while delivering a gradually improving monetization rate with narrowing EBITDA loss. Shopee could prove its execution, positioning it to achieve sustainable growth profitably. Together with steady gaming bookings on stable EBITDA margins while Fintech business delivers an improving profitability trend, Sea’s fundamental outlook is likely to turn more promising. Post estimates revision, we raise our SOTP to US$50 (from $44) on higher ecommerce multiple. With >30% ETR, we upgrade Sea to Buy/High Risk from Neutral/High Risk."

For an analyst ratings summary and ratings history on Sea Ltd. click here. For more ratings news on Sea Ltd. click here.

Shares of Sea Ltd. closed at $38.14 yesterday.

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