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Investing.com - Needham raised its price target on Unity Software (NYSE:U) to $50.00 from $40.00 on Thursday, while maintaining a Buy rating on the stock.
The price target increase follows Unity’s better-than-expected third-quarter results, which gave Needham greater conviction in the growth trajectory for the company’s Vector product.
In the third quarter, Vector grew 11% quarter-over-quarter, outperforming Unity’s mid-single-digit growth guidance, according to Needham.
While Unity guided for mid-single-digit growth in the fourth quarter, Needham believes investors will focus on potential upside to this guidance, including Vector’s growth trajectory for 2026.
Needham projects 20% year-over-year growth for Unity’s Grow segment in 2026, expecting continued improvement in Vector machine learning and modest benefits from run-time data and leveraging Vector on legacy ironSource.
In other recent news, Unity Software reported its third-quarter 2025 earnings, showcasing impressive results that have caught the attention of investors and analysts alike. The company surpassed revenue forecasts, posting $471 million against an expected $452.76 million, and delivered an earnings per share of $0.20, far exceeding the anticipated $-0.23. Following these strong financial outcomes, several analyst firms have adjusted their price targets for Unity Software. Goldman Sachs raised its target to $42, maintaining a Neutral rating, while Citizens increased its target to $45, keeping a Market Outperform rating. Morgan Stanley also elevated its price target to $48, citing positive organic growth in both business segments for the first time in nearly four years. Unity’s revenue and EBITDA both exceeded expectations, with revenue outperforming by $20 million and EBITDA by $15 million in the third quarter. The robust performance of Unity’s Create and Grow segments contributed to a positive outlook for the upcoming quarter.
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