What happened

Shares of Sea Limited (SE 1.20%) were gaining today after the Southeast Asian gaming and e-commerce company got an analyst upgrade.

As of 11:24 a.m. ET, the stock was up 9%.

So what

In a note this morning, JPMorgan Chase analyst Ranjan Sharma lifted his rating on Sea from neutral to outperform and forecast "swift improvement" in its profitability. He believes that concerns about its ability to monetize its business are already priced into the stock and that its losses will peak in the third-quarter earnings report, which comes out next Tuesday.

He also raised his earnings estimates due to the company's renewed focus on profitability and updated his price target from $85 to $70, though that implies a 59% gain from Friday's closing price.

In its guidance back in August, management indicated it would try to stem its losses, saying, "In our efforts to adapt to increasing macro uncertainties, we are proactively shifting our strategies to further focus on efficiency and optimization for the long-term strength and profitability of the e-commerce business."

Now what

Sea Limited investors are clearly looking for some good news, with the stock down 87% from its peak in late 2021. Like other pandemic winners, Sea shares soared during 2020 and 2021, but the stock has crashed over the last year as growth has slowed and losses have expanded.

With its business made up of mobile gaming through Garena, e-commerce through Shopee, and digital payments in SeaMoney, Sea was highly exposed to pandemic tailwinds and the hangover that's come as they've faded.

Revenue rose 29% to $2.9 billion in the second quarter, but its GAAP net loss widened from $433.7 million to $931.2 million, or $569.8 million on an adjusted basis, showing that the company has a lot of work to do to achieve profitability.

For the third quarter, analysts are expecting revenue of $3.01 billion, up 12% from the quarter a year ago, and its loss per share to widen from $0.84 to $1.11.

While those numbers are hardly encouraging, the low bar could help give the stock a boost if it can top those expectations next Tuesday.