What happened
Tech stocks are hardly the flavor of the moment among investors. Additionally, many equity analysts are getting more bearish on the sector. On Friday, the latter was a big factor pushing down the share price of Asian mobile games and fintech specialist Sea Limited (NYSE: SE). The company's stock fell by almost 8% after one prognosticator made a drastic price target cut.
So what
Macquarie analyst Zhiwei Foo is the culprit. That morning, he took a big pair of scissors to his target, slicing it deeply from $285 per share to $110. Despite this dramatic move, Foo is maintaining an outperform (buy) recommendation on the stock.
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Foo is not the only Sea-watcher curbing his enthusiasm for the shares lately. On Monday, China Renaissance's Sam Lee also enacted a drastic price target cut, lowering it from $266 to $156. Like Foo, however, Lee is maintaining a buy recommendation.
That wasn't the case with J.P. Morgan prognosticator Ranjan Sharma last week, however. He not only made the apparently standard Sea price target cut (from $250 per share to $105), he also downgraded his recommendation to neutral. He previously tagged the stock as an overweight (buy). In a research note, Sharma expressed concerns about Sea's e-commerce unit Shopee's profitability and legal/regulatory risk, among other headwinds.
Now what
Few investors are enthusiastic about tech stocks these days, as they are considered to be relatively risky plays in an environment where the global economy is facing significant challenges. That said, Sea is still showing rather encouraging growth in key areas, and in many ways is a dominant player in its region of Southeast Asia. Investors shouldn't necessarily throw in the towel with this company just yet.
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