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Investing.com -- Unity Software (NYSE:U) stock rose 8% in pre-market trading Wednesday after Jefferies analyst Brent Thill raised his price target on the gaming software company to a Street-high $35 from $29 previously.
The upgrade follows improving sentiment around Unity’s Vector product, with Thill noting an increase in positive mentions to 9 in the second quarter from 7 in the first quarter. The analyst also highlighted that Return on Ad Spend (ROAS) lift improved to the 10%-20% range, up from 5%-7% in the previous quarter.
"We expect the impact of Vector to be seen over multiple quarters, and are overall encouraged by the quarter-over-quarter improvement," Thill wrote in his note to clients. The analyst also observed that 2025 share intent increased to 119 basis points YoY from 19 basis points in the first quarter survey.
On Unity’s engine business, Thill pointed out that Unity 6 usage is approaching 50% of respondents and is now the most-used Unity engine, indicating stable growth in the company’s Create segment.
"We raise ’25 and ’26 rev by 2% and 3% respectively, driven by Grow improvement," Thill noted. The analyst now forecasts Unity’s Grow segment to increase 2% YoY in 2025, revised from a previous estimate of -1%, and projects 10% YoY growth in 2026, up from 8% previously.
Jefferies also raised its EBITDA estimates by 11% and 9% for 2025 and 2026, respectively, with the new price target based on 32 times 2026 estimated EBITDA.
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