Investors had initially sold off shares of Unity Software (NYSE:U) early in Friday’s trading session after the video game software company reported earnings. Nevertheless, Unity rallied throughout the day and finished with a gain of over 7%. This came as Wall Street analysts assured investors that the selloff might be an overreaction.
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Indeed, Stifel analysts, led by J. Parker, maintained their bullish stance on Unity shares but reduced their price target to $28 from $40. The analysts said the reduction reflects the multiple compressions and a lower growth outlook.
According to the analysts, Unity could still increase its market share in the Non-Gaming/Industry segment. Furthermore, the firm noted that Unity’s merger with ad tech company ironSource in 2022 could drive long-term growth and profitability.
In addition, analysts at investment firm Needham, led by Bernie McTernan, also kept their buy rating on the stock. However, the analysts also lowered their price target from $50 to $40.
Is Unity Software a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on Unity stock based on one Buy, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average Unity Software price target of $31.50 per share implies 19.36% upside potential. Nonetheless, despite today’s surge, Unity shares have lost more than 5% year-to-date.
