Sea Limited (NYSE:SE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Sea will make substantially more sales than they'd previously expected.
Following the upgrade, the most recent consensus for Sea from its 14 analysts is for revenues of US$7.8b in 2021 which, if met, would be a major 79% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$7.1b of revenue in 2021. It looks like there's been a clear increase in optimism around Sea, given the solid increase in revenue forecasts.
The consensus price target rose 6.8% to US$284, with the analysts clearly more optimistic about Sea's prospects following this update. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Sea at US$330 per share, while the most bearish prices it at US$160. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sea's past performance and to peers in the same industry. The analysts are definitely expecting Sea's growth to accelerate, with the forecast 79% annualised growth to the end of 2021 ranking favourably alongside historical growth of 58% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sea is expected to grow much faster than its industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Sea this year. Analysts also expect revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Sea.
Better yet, Sea is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. For more information, you can click through to our free platform to learn more about these forecasts.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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