Unity Software (NYSE:U) shares surged 8% in premarket trading on Wednesday following Jefferies analyst Brent Thill’s decision to raise his price target on the gaming software firm to a Street-high $35, up from $29.
The upgrade comes amid growing optimism around Unity’s Vector product, with Thill highlighting that positive mentions rose from 7 in Q1 to 9 in Q2. He also noted that Return on Ad Spend (ROAS) improvements reached the 10%-20% range, compared to 5%-7% in the previous quarter.
“We expect the impact of Vector to be seen over multiple quarters, and are overall encouraged by the quarter-over-quarter improvement,” Thill said in his client note. Additionally, he pointed out that the 2025 share intent jumped to 119 basis points year-over-year, up from 19 basis points in the Q1 survey.
Regarding Unity’s engine business, Thill observed that usage of Unity 6 is nearing 50% among respondents, making it the most widely used Unity engine and signaling steady growth in the company’s Create segment.
“We raise ’25 and ’26 rev by 2% and 3% respectively, driven by Grow improvement,” he added. The analyst now expects Unity’s Grow segment to grow 2% year-over-year in 2025, revised from a prior forecast of -1%, and forecasts 10% growth in 2026, up from 8%.
Jefferies also lifted its EBITDA projections by 11% for 2025 and 9% for 2026, with the new price target based on 32 times estimated 2026 EBITDA.
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