JMP reiterates Market Outperform rating on Unity Software stock

Investing.com - JMP Securities maintained its Market Outperform rating and $35.00 price target on Unity Software (NYSE:U) on Thursday. The company has shown remarkable momentum, with a 191.4% return over the past year and currently trading near its 52-week high. According to InvestingPro analysis, Unity’s overall financial health is rated as "GREAT."

The firm’s analysis focuses on the growing trend of web checkout solutions in the mobile ecosystem, which JMP believes will improve profitability for game developers and their partners.

JMP reports that conversations with third-party web checkout providers FastSpring and Paddle reveal clients benefit from website checkout despite a 10% reduction in conversion rates, as they avoid Apple’s 30% take rate in favor of a 5% fee.

The research firm views this development as positive for game developers and their advertising partners, specifically naming Meta (NASDAQ:META), Google (NASDAQ:GOOGL), and Unity Software.

JMP also sees benefits for digital app businesses including Duolingo, Life360, Grindr, and Peloton (NASDAQ:PTON).

In other recent news, Life360 reported second-quarter results that exceeded expectations, with revenue surpassing consensus estimates by approximately $5.2 million and EBITDA outperforming by about $6.9 million. Following these results, Citizens JMP raised its price target for Life360 to $95 from $62, maintaining a Market Outperform rating. Stifel also increased its price target to $92 from $87, citing strong performance across all segments and an upward revision of the company’s full-year guidance. Additionally, UBS raised its price target to $71 from $57, noting reduced competitive pressure from Apple’s "Find My" service. The firm’s analyst highlighted that Apple’s recent focus on privacy features suggests less direct competition with Life360’s offerings.

In leadership news, Life360 announced the promotion of Lauren Antonoff to Chief Executive Officer, with co-founder Chris Hulls transitioning to the role of Executive Chairman. This change marks a significant shift in the company’s leadership structure. Citizens JMP’s analysis emphasized that Apple accounts for 54% of Life360’s processing revenue, a notable aspect of the company’s revenue composition. These developments reflect a period of significant activity and strategic adjustments for Life360.

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