Key insights
- Piper Sandler initiated coverage on Unity Software (U) with an Overweight rating and a $40 price target, citing impressive business rebuilds and potential upside. The firm believes AI risks are overblown and sees positive trends in ad-tech and runtime opportunities. Despite a recent EPS miss, analyst revisions are largely positive, suggesting potential for continued stock appreciation, though fair value analysis indicates current overvaluation.
Investing.com - Piper Sandler initiated coverage on Unity Software Inc. (NYSE:U) with an Overweight rating and a price target of $40.00, the firm said Monday. The stock currently trades at $32.17, representing a potential 24% upside to the analyst’s target, following a strong 20% gain over the past week.
The firm said the rebuild of Unity’s Grow business is impressive and expects continued execution. Vector success is currently driven without proprietary data, making new data sources an area of interest for the company.
Piper Sandler said AI risk appears overblown and noted shares remain down more than 20% from the Genie update in January. The firm’s checks are positive on the runtime opportunity and its PSC Network Effects analysis shows Unity ad-tech improvements dating back to May 2025.
The firm said Unity could benefit from AppLovin’s success and that competition strengthens Unity’s value proposition for the long-tail of publishers.
For 2027, Piper Sandler models $776 million in EBITDA and $1.68 billion in Strategic Grow revenue. The firm views its top and bottom line assumptions as conservative and sees upside to both estimates. This would represent a significant improvement from the company’s current last twelve months EBITDA of $71 million. Supporting the bullish outlook, 6 analysts have recently revised their earnings upwards, according to InvestingPro data, which shows analyst price targets ranging from $28 to $43. However, InvestingPro’s Fair Value analysis suggests the stock may currently be overvalued at present levels.
In other recent news, Unity Software Inc. reported its financial results for the first quarter of 2026, revealing a revenue of $508.2 million, which surpassed expectations of $505 million. Despite this revenue beat, the company’s earnings per share (EPS) slightly missed forecasts, coming in at $0.23 compared to the anticipated $0.24. Following these results, several analyst firms have adjusted their outlook on Unity Software. Needham raised its price target to $40, maintaining a Buy rating, citing growth in Unity’s Vector product. Oppenheimer also increased its price target to $38, highlighting a 35% year-over-year rise in strategic revenue to $432 million and an improved adjusted EBITDA margin. BTIG followed suit, setting a new price target of $43 and revising its 2027 earnings per share projection to $0.93 from a previous loss estimate. Additionally, Unity Software’s shareholders elected three Class III directors during their annual meeting. These developments reflect the company’s strategic progress and positive reception among analysts.
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