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Investing.com - Morgan Stanley raised its price target on Unity Software (NYSE:U) to $48.00 from $44.00 on Wednesday, while maintaining an Overweight rating on the stock. Unity shares currently trade at $40.96, having surged 67% over the past six months, though they remain below Morgan Stanley’s target. The average analyst price target stands at $43, with a range between $18 and $50, according to InvestingPro data.
The increase follows Unity’s quarterly results, which showed both business segments reporting positive organic growth year-over-year for the first time in nearly four years. The company’s quarterly revenue and EBITDA came in 5% and 16% ahead of Morgan Stanley’s estimates, respectively. Despite this positive momentum, InvestingPro analysis indicates Unity is trading above its Fair Value, with the stock currently showing a market capitalization of $17.23 billion.
In the Create segment, revenue continues to accelerate as subscription price increases, which flow in on a 1-2 year contract cycle, began to take effect. Total subscription growth reached 13% year-over-year, with every geography Unity operates in showing accelerated revenue growth compared to the second quarter.
The Grow segment posted 11% quarter-over-quarter growth, up from 1% in the second quarter, driven by the new Vector AI model delivering stronger returns for advertisers at scale. Assuming other Grow products remained sequentially stable, this implies 22% quarter-over-quarter growth in Unity Ads, compared to 15% in the previous quarter.
Morgan Stanley also noted that 90% of new projects and many existing games are opting into Unity’s new Developer Data Framework that launched in August, which the firm views as a key catalyst for scaling access to runtime data that Unity plans to deploy at scale in 2026.
In other recent news, Unity Software Inc. reported its third-quarter 2025 earnings, surpassing revenue expectations and delivering a notable performance. The company achieved an earnings per share (EPS) of $0.20, which was significantly higher than the forecasted $-0.23. Unity Software also reported revenue of $471 million, exceeding the anticipated $452.76 million. These results have garnered attention from investors and analysts alike. While the earnings call did not mention any mergers, the focus remained on the company’s financial achievements. There were no updates on analyst upgrades or downgrades in the recent period. Unity’s strong performance in revenue and earnings per share marks a positive development for the company.
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