Unity Software Analysts Assign Triple-Digit Price Targets On Gaming Strength, Future Growth Verticals

Unity Software U saw a string of bullish calls from analysts initiating coverage Tuesday thanks to the company’s growth potential outside of its gaming business. 

Unity Analysts On Its Gaming Platform: Unity has relationships with many of the top gaming companies, including Electronic Arts Inc. EA, Nintendo NTDOY, Take-Two Interactive Software, Inc. TTWO, Tencent Holdings TCEHY and Zynga Inc ZNGA.

"The company’s large engaged customer base and community provides Unity access to significant end-user engagement and performance data which allows the company to optimize content performance, user acquisition and monetization,” Goldman Sachs analyst Heather Bellini said in a note. 

The analyst highlights games like “Arena of Valor,” “Honor of Kings” and “Pokemon Go” as popular mobile games that have used the Unity platform.

Piper Sandler analyst Brent Bracelin points to the “outsized market share within mobile gaming” for Unity.

Unity is led by former Electronic Arts CEO John Riccitiello.

Credit Suisse's Brad Zelnick said the gaming market has seen acceleration during the pandemic.

“Unity has a significant presence and leading position in this end market (gaming) with around 50% of game development market share, around 3 billion app downloads a month and reach across 2B+ devices,” the analyst said. 

Related Link: Unity Software IPO: What Investors Need To Know

Growth Beyond Gaming: Goldman's Bellini sees growth for Unity coming from industries like architecture, engineering, construction and automotive. 

“We believe Unity is well positioned to capture market share in gaming and non-gaming verticals,” the analyst said. 

Piper Sandler's Bracelin said Unity has “a long runway for growth,” with the company being in the early stages of “powering beyond gaming.”

“The company is just scratching the surface of a much broader opportunity in gaming (15 million game developers) and beyond gaming (37 million engineers in automotive and AEC sectors),” the analyst said. 

Credit Suisse's Zelnick calls the non-gaming potential for Unity “significant” and said  the company has multiple paths to revenue upside.

The Unity Analysts: Goldman Sachs initiated coverage of Unity Software with a Buy rating and $100 price target.

Piper Sandler initiated at Overweight rating on Unity with a $112 price target.

Credit Suisse initiated at Outperform with a $120 price target.

U Price Action: Unity shares were trading 2.12% higher at $91.70 at last check Tuesday. 

Benzinga’s Take: The bullish calls from analysts today follow a Loup Ventures report that compared Unity to Autodesk Inc ADSK and Adobe Inc ADBE.

Loup Ventures believes Unity can add 3.3 million subscribers and keep its high average revenue per subscriber to beat Autodesk’s market cap in five to seven years.