Kash Rangan, an analyst from Goldman Sachs, reiterated the Hold rating on Unity Software (U – Research Report). The associated price target is $29.00.
Kash Rangan has given his Hold rating due to a combination of factors impacting Unity Software’s recent performance and future outlook. The company displayed a pro-forma growth slowdown in its fourth quarter of 2023, with stagnation in its Grow segment and a decline in its Create segment. This underperformance raises concerns about Unity’s ability to follow through on its product roadmap and monetization strategies, which are crucial for its recovery and outperformance relative to market expectations. Despite these challenges, Rangan notes that the worst of the company’s negative earnings revisions may be behind it and that a narrower focus on key growth initiatives could potentially improve margins through more efficient investment returns.
Furthermore, Rangan acknowledges the potential for Unity Software in the non-gaming sector, which has seen significant investment and offers higher service value compared to the gaming industry. Nevertheless, Rangan remains cautious and looks for several indicators before adopting a more positive stance. These include the appointment of a permanent CEO, clear evidence of sustained top-line growth re-acceleration, and strong execution following strategic changes, including recent workforce reductions. The combination of these factors leads to the decision to maintain a Hold rating, while adjusting the price target slightly to reflect these ongoing uncertainties and the current corporate situation.
According to TipRanks, Rangan is a 5-star analyst with an average return of 12.8% and a 62.86% success rate. Rangan covers the Technology sector, focusing on stocks such as Samsara, Adobe, and Intuit.
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Unity Software (U) Company Description:
California-based Unity Software Inc. is a video game software development company. The platform provides software solutions to create and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The products are used in the gaming industry, architecture and construction sector, animation industry, and designing sector.
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