It's been a tough couple of years for Sea Limited (SE 0.05%) investors. The company's three operating segments -- video games, e-commerce, and financial technology (fintech) -- were all hammered by the downturn. The road back has been a long one, but on the heels of the company's fourth-quarter financial report, analysts are increasingly optimistic.
Analysts at Jefferies recently boosted their price target to $82, up from $80, while maintaining a buy rating on the stock, according to The Fly. This represents potential gains for investors of 52% compared to Monday's closing price.
The analyst's view was bolstered by the results of Shopee, the company's e-commerce platform, saying it "continues to strengthen service quality, price competitiveness, and content." He also noted that gross merchandise volume (GMV) is expected to climb by high teens year-over-year, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to be positive in the back half of 2024.
Jefferies isn't alone. There was a wave of enthusiasm for Sea Limited on Wall Street, with two upgrades and nine price target increases, at the time of this writing.
Plenty to like
Perhaps the biggest reason to celebrate is that Sea Limited was in the black in 2023, marking the first full year of profitability since its IPO in late 2017. Furthermore, each of the three main business segments improved. Management noted that Shopee achieved a "meaningful gain in market share" over the course of 2023. Free Fire was the most downloaded mobile video game in the world last year, and SeaMoney -- its fintech segment -- was profitable for the full year.
Despite the trajectory and the remarkable strides Sea Limited has made to get its financial house in order, the stock is remarkably cheap, selling for roughly 2 times sales. Furthermore, analysts' consensus estimates are calling for revenue to increase by 26% and earnings per share (EPS) to soar 468% by 2025.
Seems like it might finally be time to buy Sea Limited stock again.
