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Investing.com - Needham has raised its price target on Unity Software (NYSE:U) to $40.00 from $30.00 while maintaining a Buy rating on the stock following the company’s second-quarter results. The stock has shown remarkable momentum, delivering a 138% return over the past year, according to InvestingPro data.
The research firm cited Unity’s better-than-expected second-quarter performance as the basis for increasing its estimates and price target. Needham believes Unity deserves a premium multiple due to its strategic positioning in the mobile gaming ecosystem, suggesting the company is currently under-earning relative to its market position. The company maintains strong liquidity with a current ratio of 2.74, while operating with moderate debt levels.
Needham highlighted Vector as a crucial step in improving Unity’s earnings power, noting it contributed to 15% growth in the legacy Unity ad network during the second quarter. The company has guided for 10% growth in the third quarter for this segment.
The research firm expects these gains to continue, projecting 20% year-over-year growth for Unity’s Grow segment next year. Needham sees additional upside potential from improvements to Vector by leveraging Create data and expanding Vector to legacy IronSource.
Positive estimate revisions should result in significant flow-through to adjusted EBITDA and free cash flow, according to Needham’s analysis of Unity’s financial outlook.
In other recent news, Unity Software reported impressive financial results for the second quarter of 2025, surpassing analyst expectations. The company achieved an earnings per share (EPS) of $0.18, which was significantly higher than the projected $0.13. Revenue also exceeded forecasts, reaching $441 million, which is $14.2 million above analyst estimates. These results highlight strong performance in Unity’s business segments, particularly with Unity Ads showing a 15% growth quarter-over-quarter. Jefferies has responded to these developments by raising its price target for Unity Software from $35.00 to $40.00, while maintaining a Buy rating. The research firm attributes this adjustment to the positive momentum observed in Unity’s Vector platform. Unity Ads now accounts for 49% of the company’s Grow segment, further validating the company’s strategic direction. These recent developments indicate a period of growth and optimism for Unity Software.
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