Investing.com -- Bank of America downgraded Sea Limited (NYSE:SE) to Neutral from Buy in a note Friday. The bank highlighted the stock’s steep rally and balanced risk-reward profile following a sharp rebound.
The firm maintained its price target for SE at $160, implying modest upside of about 9% from current levels.
“We downgrade Sea to Neutral from Buy as we find risk-reward more balanced now after its strong outperformance,” BofA analysts wrote. Sea shares have surged 270% since January 2024, far outpacing the S&P 500 and Nasdaq, which are up 18% and 20%, respectively.
While fundamentals remain solid across Sea’s e-commerce, gaming, and fintech segments, BofA sees limited upside in the near term.
“We think that these numbers adequately factor Sea’s momentum and see limited material upside in the near-term – particularly in-light of a slowing macro,” the firm noted, referring to consensus estimates for 2025 and 2026.
Sea’s core e-commerce platform Shopee is projected to grow revenue by 25% in 2025 and 19% in 2026, with margins improving modestly. Its gaming arm is expected to deliver 16% and 10% revenue growth in 2025 and 2026, respectively.
The digital financial services unit, DFS (Monee), is projected to grow 29% and 24% over the same period.
Key risks are said to include intensifying competition, particularly from TikTok, and the threat of aggressive expansion moves.
BofA also flagged regional trade dynamics: “In a scenario China starts dumping more goods in SE Asia, then we see other Chinese platforms like Lazada, TikTok doing better than Shopee.”
On valuation, BofA said that “at current levels, Sea’s valuations are not inexpensive,” citing a well-owned investor base and diminishing room for outperformance.