Morgan Stanley Maintains Overweight on Unity, Raises PT to $40 from $25.

Morgan Stanley Maintains Overweight on Unity, Raises PT to $40 from $25.

Morgan Stanley has upgraded its rating on Unity Software (NYSE: U) to "Overweight" and raised its price target to $40 from $25, reflecting the investment bank's positive outlook on the company's recent earnings performance and future growth prospects [1].

Unity Software reported stronger-than-expected financial results for the second quarter of 2025, with earnings per share (EPS) and revenue surpassing analyst forecasts. The company posted an EPS of $0.18, beating the forecast of $0.13 by 38.46%, and revenue reached $441 million, exceeding expectations by $14.2 million [4]. The positive earnings report led to an 11.33% increase in Unity’s stock price during pre-market trading, with shares reaching $37.78 [4].

Morgan Stanley analysts highlighted Unity's strategic initiatives, including product innovation and expansion into new sectors such as automotive and healthcare, as key drivers of growth. They also noted the company's strong cash flow and robust financial performance, which have positioned Unity as a strong player in the tech industry [4].

The investment bank also pointed to Unity's successful launch of the Unity Vector AI advertising platform and its potential for long-term growth through strategic partnerships [4]. Despite market saturation in the gaming sector and high competition in the AI and digital content sectors, Unity's strong performance and forward-looking guidance have bolstered investor confidence [4].

In addition to the positive earnings report, Unity's stock has demonstrated remarkable performance, with a 138.18% return over the past year and a 51.05% gain year-to-date, according to InvestingPro data [4]. The company's strategic initiatives and robust financials have driven investor confidence in Unity's growth prospects.

Morgan Stanley's upgrade and price target raise reflect the investment bank's positive outlook on Unity's growth potential and the company's ability to execute on its strategic initiatives. The upgrade also highlights the importance of Unity's recent earnings performance and forward-looking guidance in shaping investor sentiment.

References:
[1] https://seekingalpha.com/news/4481882-morgan-stanley-direct-lending-fund-nii-of-050-misses-by-001
[2] https://intellectia.ai/stock/U/forecast
[3] https://seekingalpha.com/news/4478541-unity-software-q2-2025-earnings-preview
[4] https://www.investing.com/news/transcripts/earnings-call-transcript-unity-software-beats-q2-2025-forecasts-stock-surges-93CH-4173667