Unity Software Shares Pop As Analysts Hail Stock Following Q2 Earnings Beat

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  • Goldman Sachs analyst Kash Rangan initiated coverage of Unity Software Inc U with a Buy rating and $135 price target, implying a 26% upside after Unity's strong Q2 results, 
  • Rangan sees the company as well-positioned to benefit from multiple compounding pivots in the gaming software industry following the strong Q2 results.
  • Unity's core design engine has greater than 50% market share in global mobile game development, allowing it to ingest over 50 billion unique data points daily from its 3.4 billion MAUs, which drives his conviction.
  • Stifel analyst Tom Roderick raised the price target to $135 from $125 and maintained a Buy. 
  • Unity posted a $32 million revenue beat for the quarter, with Operate accounting for the entirety of the beat, growing at 63% Y/Y off a tough compare, Roderick notes. 
  • He thinks traditional back-to-school seasonality and broader conservatism keep this beat and raise the story right on track.
  • Piper Sandler analyst Brent Bracelin raised the price target to $152 from $150, implying a 41.9% upside, and affirmed an Overweight. 
  • Operate revenue growth of 25% Q/Q and 63% Y/Y as Unity gained share from general-purpose ad networks in Q2 show that investor fears about IDFA privacy changes proved to be overly pessimistic, Bracelin notes. 
  • Unity remains well-positioned for durable share gains post-IDFA and has untapped potential to further expand the footprint inside and outside of gaming. Bracelin reiterates the stock as a top second-half idea for growth investors.
  • Price Action: U shares traded higher by 13.2% at $121.30 on the last check Wednesday.
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