Morgan Stanley Upgrades Unity Software to Overweight, Maintains Price Target to $22
Written by Emily J. Thompson, Senior Investment Analyst
0mins
Should l Buy U?
Source: Newsfilter
- Analyst Upgrade: Morgan Stanley analyst Matthew Cost has upgraded Unity Software's rating from Equal-Weight to Overweight.
- Price Target Maintained: The price target for Unity Software remains unchanged at $22.
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Analyst Views on U
Wall Street analysts forecast U stock price to rise
20 Analyst Rating
13 Buy
6 Hold
1 Sell
Moderate Buy
Current: 19.450
Low
21.00
Averages
48.71
High
60.00
Current: 19.450
Low
21.00
Averages
48.71
High
60.00
About U
Unity Software Inc. provides a platform for creating and growing games and interactive experiences. The Company offers a suite of tools across all platforms, from mobile, PC, and console, to extended reality (XR). Its set of software, including artificial intelligence (AI) solutions, supports creators through the entire development lifecycle. The Company’s platform consists of two complementary sets of solutions: Create Solutions and Grow Solutions. Create Solutions is a robust set of tools and services used to build, ship and run high-definition, real-time two-dimensional (2D) and three-dimensional (3D) content. Designed for developers, these tools and services are used across a range of industries, ranging from games to aerospace, construction to retail, medical to manufacturing, and others. Grow Solutions offers customers the ability to engage their user base and monetize their content from 2D puzzle games to multiplayer, multi-platform games, or other 3D interactive content.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Earnings Beat: Unity expects Q1 2026 revenue between $505 million and $508 million, significantly exceeding the prior forecast of $480 million to $490 million, indicating robust market demand and growth potential.
- Strong Profit Outlook: Adjusted EBITDA is anticipated to be between $130 million and $135 million, compared to previous guidance of $105 million to $110 million, reflecting significant progress in cost control and operational efficiency.
- Strategic Restructuring: The company has decided to shut down its ironSource Ads Network and has engaged a financial advisor to explore the sale of its Supersonic game publishing business, aiming to focus on its core game engine and advertising operations to enhance overall efficiency.
- Sale of China Division: Unity plans to sell its China division for over $1 billion to mitigate geopolitical risks and concentrate on its core business, a move that will help optimize resource allocation and strengthen its competitive position in the market.
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- Adjusted EBITDA Growth: The company expects adjusted EBITDA to range from $130 million to $135 million, up from the earlier estimate of $105 million to $110 million, indicating a significant improvement in profitability.
- Strategic Business Shift: Unity is embarking on a growth initiative that includes exiting the ironSource Ads Network and Supersonic game publishing, with expectations that these changes will accelerate revenue growth and enhance adjusted EBITDA margins.
- CEO's Positive Outlook: CEO Matt Bromberg stated that the robust growth of the Vector business will meaningfully enhance both revenue and profitability, underscoring the company's strengthening competitive position in the market.
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- Surge in Trading Volume: Today's trading volume reached 51.5 million shares, over 200% above the three-month average of 16.8 million shares, indicating a significant increase in market interest in Unity Software, potentially attracting more investors.
- Strategic Restructuring Impact: Unity Software is streamlining operations by shutting down its ironSource Ads Network and selling its Supersonic games division, which may help improve overall efficiency and profitability, thereby enhancing its competitive position in the market.
- Analyst Price Target Increases: Both Bank of America and Morgan Stanley have raised their price targets for Unity Software, reflecting optimistic market expectations for its future growth potential, with investors closely watching AI developments and Q2 guidance to assess the sustainability of this growth.
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- Oil Price Surge: WTI crude oil prices surged over 5% due to fears surrounding the Iran conflict, which not only exacerbates inflation expectations but may also compel the Federal Reserve to tighten monetary policy, impacting overall economic growth.
- Consumer Sentiment Drop: The University of Michigan's consumer sentiment index was revised down to 53.3 from 55.5, below the expected 54.0, reflecting a pessimistic outlook among consumers regarding future economic conditions, potentially suppressing consumer spending.
- Escalating US-China Trade Tensions: China launched investigations into US trade practices targeting restrictions on Chinese goods, which could further disrupt global supply chains and increase market uncertainty.
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- Unity Options Volume: Unity Software Inc saw options trading volume of 92,010 contracts, equating to approximately 9.2 million shares, which represents about 67.1% of its average daily trading volume over the past month, indicating strong market interest in its future performance.
- High-Frequency Contracts: Within Unity, the $22 strike call option has seen 9,161 contracts traded today, representing around 916,100 underlying shares, reflecting investor expectations for the stock to rise before expiration in 2026.
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Unity's Q1 Results Exceed Expectations, Shares Surge
- Earnings Beat: Unity expects Q1 2026 revenue between $505 million and $508 million, significantly exceeding the prior forecast of $480 million to $490 million, indicating robust market demand and growth potential.
- Strong Profit Outlook: Adjusted EBITDA is anticipated to be between $130 million and $135 million, compared to previous guidance of $105 million to $110 million, reflecting significant progress in cost control and operational efficiency.
- Strategic Restructuring: The company has decided to shut down its ironSource Ads Network and has engaged a financial advisor to explore the sale of its Supersonic game publishing business, aiming to focus on its core game engine and advertising operations to enhance overall efficiency.
- Sale of China Division: Unity plans to sell its China division for over $1 billion to mitigate geopolitical risks and concentrate on its core business, a move that will help optimize resource allocation and strengthen its competitive position in the market.
See More
A Hectic Week for Video Games: Watch These Stocks Closely.
- Market Uncertainty: The videogame industry is facing increasing uncertainty, prompting investors to reassess potential long-term stock opportunities.
- Investor Insights: Recent news provides insights for investors on which stocks may be attractive as the industry evolves.
- Growth Potential: Despite short-term challenges, the overall growth potential of the videogame sector remains a focal point for investment strategies.
- Stock Evaluation: Investors are encouraged to evaluate stocks based on the latest industry developments and trends.
See More
Unity Software Raises Revenue Outlook, Stock Surges
- Revenue Outlook Upgrade: Unity Software has raised its Q1 2023 revenue forecast to between $505 million and $508 million, reflecting a 3.7% to 5.2% increase from the previous target of $480 million to $490 million, driven by strong performance from its Vector business.
- Adjusted EBITDA Growth: The company expects adjusted EBITDA to range from $130 million to $135 million, up from the earlier estimate of $105 million to $110 million, indicating a significant improvement in profitability.
- Strategic Business Shift: Unity is embarking on a growth initiative that includes exiting the ironSource Ads Network and Supersonic game publishing, with expectations that these changes will accelerate revenue growth and enhance adjusted EBITDA margins.
- CEO's Positive Outlook: CEO Matt Bromberg stated that the robust growth of the Vector business will meaningfully enhance both revenue and profitability, underscoring the company's strengthening competitive position in the market.
See More
Unity Software Shares Surge 13.57% on Q1 Revenue Guidance Beat
- Revenue Guidance Beat: Unity Software projects Q1 2026 revenue between $505 million and $508 million, significantly up from the previous range of $480 million to $490 million, indicating strong growth driven by its AI ad platform, Unity Vector, which may enhance investor confidence.
- Surge in Trading Volume: Today's trading volume reached 51.5 million shares, over 200% above the three-month average of 16.8 million shares, indicating a significant increase in market interest in Unity Software, potentially attracting more investors.
- Strategic Restructuring Impact: Unity Software is streamlining operations by shutting down its ironSource Ads Network and selling its Supersonic games division, which may help improve overall efficiency and profitability, thereby enhancing its competitive position in the market.
- Analyst Price Target Increases: Both Bank of America and Morgan Stanley have raised their price targets for Unity Software, reflecting optimistic market expectations for its future growth potential, with investors closely watching AI developments and Q2 guidance to assess the sustainability of this growth.
See More
US Stocks Plunge as Oil Prices Surge Amid Iran Conflict
- Market Decline: The S&P 500 index fell by 1.67%, marking a 7-month low, while the Nasdaq 100 and Dow Jones Industrial Average dropped by 1.93% and 1.73%, respectively, indicating heightened concerns over economic slowdown.
- Oil Price Surge: WTI crude oil prices surged over 5% due to fears surrounding the Iran conflict, which not only exacerbates inflation expectations but may also compel the Federal Reserve to tighten monetary policy, impacting overall economic growth.
- Consumer Sentiment Drop: The University of Michigan's consumer sentiment index was revised down to 53.3 from 55.5, below the expected 54.0, reflecting a pessimistic outlook among consumers regarding future economic conditions, potentially suppressing consumer spending.
- Escalating US-China Trade Tensions: China launched investigations into US trade practices targeting restrictions on Chinese goods, which could further disrupt global supply chains and increase market uncertainty.
See More
Surge in Options Trading Volume for Unity and Occidental
- Unity Options Volume: Unity Software Inc saw options trading volume of 92,010 contracts, equating to approximately 9.2 million shares, which represents about 67.1% of its average daily trading volume over the past month, indicating strong market interest in its future performance.
- High-Frequency Contracts: Within Unity, the $22 strike call option has seen 9,161 contracts traded today, representing around 916,100 underlying shares, reflecting investor expectations for the stock to rise before expiration in 2026.
- Occidental Options Volume: Occidental Petroleum Corp's options trading volume reached 141,747 contracts, approximately 14.2 million shares, accounting for 65.1% of its average daily trading volume over the past month, showcasing significant market interest in its stock.
- Key Contract Analysis: For Occidental, the $63 strike call option has traded 8,484 contracts today, representing about 848,400 shares, indicating that investors are optimistic about the stock's potential increase before its expiration in 2026.
See More
