Unity (U) Well Positioned for Ad Network Market Share Boost

Unity Software (NYSE:U) is one of the 12 oversold software stocks to invest in.

On February 12, Wells Fargo analyst Alec Brondolo maintained his Overweight rating on Unity Software (NYSE:U), while reducing the price target from $54 to $38. The adjustment still results in an upside potential of more than 103%.

Brondolo noted that the recent financial results were dragged down by weak performance in the company’s Ironsource division and seasonality in the Create business that was higher than previously anticipated. However, these factors do not overshadow the analyst’s optimism amid runtime data that is expected to boost its Ad Network market share.

On February 12, Goldman Sachs analyst Eric Sheridan reiterated his Neutral rating on Unity Software (NYSE:U). The analyst also lowered the price target from $47 to $27, implying more than 44% upside.

Sheridan reflected on the company’s fourth-quarter results, which exceeded revenue and adjusted EBITDA estimates. However, the first-quarter guidance fell below prior expectations, pointing to short-term hurdles. Despite the near-term challenges, management is strategizing revenue and margin growth for game creation, distribution, and in-game monetization. The company is also looking to tap into opportunities within the China-based ecosystem.

Unity Software (NYSE:U) offers tools for developing interactive real-time 2D and 3D content for mobile phones, personal computers, consoles, and extended reality devices. The company helps developers across the overall development lifecycle through its AI-enabled platform. Other offerings include Create Solutions and Grow Solutions for user engagement and monetization of content.

While we acknowledge the potential of U as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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