BofA Takes Wait-and-See Approach on Sea Ltd. (SE)
On Tuesday, May 27, Bank of America Securities analyst Sachin Salgaonkar maintained a Hold rating on Sea Limited (NYSE:SE), keeping the price target unchanged at $170. Sea's stock has risen 55% year-to-date, and the analyst notes that its current valuation looks expensive based on its 2026 forward price-to-earnings (P/E) ratio, particularly when compared to other e-commerce peers.
An e-commerce platform displaying a wide range of products to customers online.
Salgaonkar highlighted that due to the high valuation, some hedge funds have begun trimming their positions after achieving solid gains earlier this year. At the same time, he maintains that many long-term investors remain optimistic about the company's prospects. A key focus for investors in the coming quarters is the potential for EBITDA margin improvement at Shopee, Sea's e-commerce platform. However, the analyst does not expect any meaningful upside in this area.
He also emphasized the need for greater clarity regarding the quality of the fintech division's loan portfolio, which remains under scrutiny. Additionally, Salgaonkar believes the company must work on expanding its e-commerce margins, which could help support a higher valuation over time.
Sea Ltd. is a consumer internet holding company. It operates three core businesses of e-commerce, digital financial services, and digital entertainment, known as Shopee, SeaMoney, and Garena, respectively.
While we acknowledge the potential of SE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SE and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
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