These 3 Unity Software Analysts Offer Their Takeaways On Q3 Print

Zinger Key Points
  • Unity Software’s key KPIs are weak, one analyst says.
  • The sector is likely to deteriorate following this earnings cycle, another analyst states.
These 3 Unity Software Analysts Offer Their Takeaways On Q3 Print

Although Unity Software Inc U reported Wednesday disappointing third-quarter revenues, its stock recorded gains.

Benchmark On Unity Software

Analyst Mike Hickey maintained a Sell rating, with a price target of $16.

“U delivered disappointing F3Q22 results, missing Benchmark estimates on both revenue and profitability,” Hickey wrote in a note.

“Key KPIs were weak, customers generating $100k TTM was down sequentially, and dollar-based net expansion rate was the lowest on record, down 22% Y/Y,” the analyst stated. “U lacked the courage to provide FY23 guidance,” he added.

Check out other analyst stock ratings.

Needham On Unity Software

Analyst Bernie McTernan reaffirmed a Buy rating, while cutting the price target from $50 to $35.

“The quarter was not thesis changing for us as Create revenue growth accelerated before the impact of the price increase and Operate is recovering before the highly strategic addition of IS,” McTernan said in a note.

“However, the outlook for the sector following this earnings cycle is certainly lower which is the primary driver of our lower PF revenue estimates for '23E as we formally introduce IS to our estimates,” he added.

Piper Sandler On Unity Software

Analyst Brent Bracelin reaffirmed an Overweight rating and price target of $33.

“Eroding gaming and advertising demand coupled with the completed Iron Source merger (60% exposure to ad-related services) has elevated investor controversy on U and pressured the enterprise valuation to <$9B for a business model that could scale to $4B + in revenue (vs. $2B+ in 2023E) with $1B+ in EBITDA within 3-4 years,” Bracelin said.

“While execution risk could remain elevated for the next two quarters, patient investors willing to look out 2-3 years could be rewarded by earnings and multiple expansion,” he mentioned.

U Price Action: Shares of Unity Software had risen by 26.98% to $27.30 at the time of publication on Thursday.

Read Next: What's Going On With Unity Software Stock Today?

Photo: nikkimeel via Shutterstock

Posted In: BenchmarkBernie McTernanBrent BracelinMike HickeyNeedhamPiper SandlersoftwareAnalyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTrading Ideas