Unity Software (U) Ends Run as HSBC Downgrades Rating

We recently published 11 Stocks Failing to Keep up With The Market. Unity Software Inc. (NYSE:U) is one of the top performers on Tuesday.

Unity Software snapped a two-day winning streak on Tuesday, shedding 6.75 percent to close at $40.04 apiece as investors took path from a rating downgrade from an investment firm.

In a market note, HSBC revised its recommendation for Unity Software Inc. (NYSE:U) to “hold” from “buy” previously amid valuation concerns, having already jumped by nearly 100 percent year-to-date as compared with the S&P 100’s 15-percent gain.

“Growing investor confidence in the prospects of a successful turnaround in Unity’s operations under its new management has seen Unity’s share price +91% YTD (vs the S&P100 index +15%), now trading at c9.8x NTM sales, a 66% premium to its 2-year average, and implying an EV/26e sales multiple for its Grow segment of c9-12x,” HSBC said.

Albeit Unity Software Inc. (NYSE:U) was valued lower than its counterpart, AppLovin Corp., HSBC said that the latter has demonstrated a more superior growth and execution.

Despite the downgrade, HSBC still gave Unity Software Inc. (NYSE:U) a higher price target of $40.80 versus the $37.50 previously.

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Disclosure: None. This article is originally published at Insider Monkey.