BofA Securities has reduced its 12-month price target for Sea Ltd. to $150.00 from $182.00 but maintained a Buy recommendation on the shares, citing expectations that e-commerce margins will come under pressure amid ongoing investment activity across Southeast Asia, Taiwan and Brazil.
The firm continues to forecast stable revenue momentum across Sea’s businesses even as it models specific margin and growth dynamics for each division.
E-commerce outlook
For Sea’s commerce segment, BofA projects gross merchandise value (GMV) to rise 26% year-over-year, and expects a quarterly uptick in take-rate to 13.7% driven by higher commissions and advertising rates. The bank notes these gains will be partially offset by the use of logistics vouchers. On the profitability front, BofA models a decline in e-commerce EBITDA margin to 0.50% from 0.6% in the prior quarter.
Fintech (Monee) expectations
In the fintech arm, referred to as Monee, BofA assumes 55% year-over-year topline growth and anticipates that macroeconomic softness does not materially change the risk profile. Still, the bank forecasts a deterioration in EBITDA margins of 309 basis points quarter-over-quarter to 23%, attributing the drop to increased sales and marketing spending and variability in interest yields.
Gaming segment
BofA expects Sea’s gaming results to normalize in the fourth quarter after an elevated third quarter that benefited from a Naruto phase 2 collaboration. The bank projects cash revenues to fall about 13% quarter-over-quarter, with an EBITDA margin in the 55-57% range for the gaming division.
Capital allocation and buyback
Separately, Sea Ltd. has announced a $1 billion share repurchase program. The company’s board has authorized the buyback of American depositary shares, with the timing and precise amounts to be determined based on market conditions and other relevant considerations.
Analyst activity and broader market view
Analysts have shown a mix of reactions to Sea’s outlook. Maybank Kim Eng upgraded the stock from Hold to Buy, citing an attractive risk-reward profile after a notable share price correction. Phillip Securities also moved the rating to Buy from Neutral, retaining a $170.00 price target and raising its revenue forecasts for fiscal 2025 and 2026 by 3% and 4%, respectively.
By contrast, Bernstein SocGen lowered its price target to $170.00 from $185.00 while keeping an Outperform rating, suggesting the recent pullback related to AI developments could be overdone and that Sea might benefit from advancements in artificial intelligence. Together, these analyst actions reflect a mixed but broadly constructive stance on Sea’s prospects.
While BofA’s reduced target underscores concerns about margin trajectories in commerce and fintech amid continued investment, the combination of steady revenue forecasts, a substantial buyback authorization and several analyst upgrades signal that opinions on Sea’s medium-term outlook remain varied.