Sea Ltd stock falls as UBS downgrades to neutral on limited growth visibility

Sea Ltd (SE) stock falls as UBS downgrades to Neutral on limited growth visibility


By Senad Karaahmetovic

UBS analysts downgraded Sea Ltd (NYSE:SE) shares to Neutral from Buy with the price target slashed to $92 per share (down from $105).

The key factor behind the downgrade is the lacking visibility on top-line growth.

“While our thesis on acceleration of profitability has played out and Sea continues to make progress on margins; growth outlook for 2023 remains uncertain due to changing competitive environment. This could limit positive surprises as cost cuts come to an end in 1-2 quarters,” they said in a downgrade note.

The analysts see potential for margins to improve further in the first half of this year on further cost cuts. They also highlight the year-to-date (YTD) surge in SE shares (+56.6%).

“[SE] trades at 2.9x 24e EV/Sales, a 40-60% premium to Grab and GoTo with slightly lower revenue CAGR (22-25e) of 17% vs. 20% and 23% for Grab and GoTo. At current valuations, we believe risk/reward is balanced,” the analysts concluded.

Sea stock trades 2.6% lower in pre-market Thursday.


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