Investors had initially sold shares in Unity Software (NYSE:U) early in Friday’s trading session after the video game software company reported earnings. Nevertheless, Unity rallied throughout the day and ended with a gain of over 7%. This came as Wall Street analysts assured investors that the selloff could be an overreaction.
In fact, Stifel analysts, led by J. Parker, maintained their bullish stance on Unity shares but cut their price target to $28 from $40. The analysts said the reduction reflects the many compressions and a lower growth outlook.
According to the analysts, Unity can still increase its market share in the Non-Gaming/Industry segment. Additionally, the firm noted that Unity’s merger with ad tech company ironSource in 2022 could drive long-term growth and profitability.
In addition, analysts at investment firm Needham, led by Bernie McTernan, also maintained their buy rating on the stock. However, the analysts also lowered their price target from $50 to $40.
Is Unity software a buy, sell or hold?
We turn to Wall Street, Analysts have a Hold consensus rating on Unity stock based on one Buy, three Holds and zero Sells assigned in the past three months, as shown in the graphic below. Furthermore, Unity Software’s average price target of $31.50 per share implies 19.36% upside potential. Nevertheless, despite today’s rise, Unity shares have lost more than 5% year-to-date.