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Unity Software Surges as Earnings Beat Drives Price Target Hikes

Unity Software's second-quarter results push the shares higher and garner support from analysts.
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Unity Software  (U) - Get Unity Software, Inc. Report climbed Wednesday as analysts responded to the 3D videogame development platform's better-than-expected second-quarter results and increased guidance.

Shares of the San Francisco company at last check were climbing 9.1% to $116.92.

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Unity Software reported a loss of 2 cents a share, beating the FactSet analyst consensus estimate of a loss of 11 cents. 

Revenue totaled $273.6 million, up 48% from a year ago and ahead of FactSet's call for $242.3 million. 

The company also boosted its full-year guidance.

Chief Financial Officer Luis Visoso emphasized in a statement that the operate solutions group "expanded market share in a tough environment."

Piper Sandler analyst Brent Bracelin maintained his overweight rating while raising his price target to $152 from $150.

The analyst said that investor fears that Apple's  (AAPL) - Get Apple Inc. Report identifier for advertisers  changes could hurt Operate ad revenue "proved to be overly pessimistic."

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Bracelin added that the results and full-year guidance reinforce "our bullish view that Unity remains well positioned for durable share gains [post-identifier-for-advertisers] and has untapped potential to further expand the footprint inside and outside of gaming."

Franco Granda, analyst with D.A. Davidson, reiterated his buy rating on the company, saying Unity posted "another beat and raise quarter on broad-based strength."

"In an environment where Unity’s customers, and some of its peers, have struggled to find a footing in the post-IDFA world, several quarters of preparation positioned the company well for the privacy changes in iOS," Apple's operating system, said Granda, who has a $150 price target.

Credit Suisse analyst Stephen Ju, who has an outperform rating and $170 price target, said "Unity is emerging as a net beneficiary of IDFA for now and appears to be gaining market share."

"Unity continues to add new customers in non-gaming verticals -- citing multiple wins in the automotive, consumer, and aerospace and defense industries," he said.

Goldman Sachs analyst Kash Rangan initiated coverage of Unity Software with a buy rating and $135 price target, according to the Fly.

After Unity delivered "strong" results, Rangan said the company is well positioned to benefit from "multiple compounding pivots in the gaming software industry." 

Unity's core design engine has greater than 50% market share in global mobile game development, he said.

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