Unity Software Inc. shares rose Wednesday after analysts applauded the gaming-software company’s growth and its ability to dodge a major change Apple Inc. made to online advertisements.
Unity shares rallied more than 10% Wednesday, having last reached an intraday high of $119.45 — a contrast to the stock’s after-hours performance late Tuesday, when it fluctuated between slight gains and losses — as Wall Street chimed in on the company’s quarterly report and outlook. Unity raised its outlook for the year late Tuesday following a strong quarter and announced the acquisition of remote-desktop and streaming-technology company Parsec for $320 million, or nearly a third of its ready cash. That all comes less than a year after Unity’s IPO.
Wedbush analyst Michael Pachter, who has an outperform rating and raised his price target to $129 from $125, expects “significant top-line growth for several years” from Unity after it pulled off an end-around with Apple Inc. Earlier in the year, Apple opted out of using Identifier for Advertisers, or IDFA, in its privacy update, a move that worried many companies such as Facebook Inc. that rely upon ad revenue. IDFA is like a cookie that’s attached to a specific device like a smartphone rather than a browser to collect user information to better target ads.
For more: Why Facebook is considering an antitrust lawsuit against Apple
Pachter noted that Unity’s Operate Solutions business, which helps developers make money on their games and content through ads, drove much of the company’s growth as it worked around the IDFA change by using ad models that didn’t rely on data from Apple but used data from an end user’s engagement and platform performance data.
“As a result, the Unity platform is able to analyze 50 billion in-app events on a daily basis across 20 different platforms, offering customers access to vast amounts of data,” Pachter said.
Stifel analyst Tom Roderick, who has a buy rating and raised his target price to $135 from $125, said “if there was any controversy to find around Unity, it was most certainly the question of whether or not IDFA would create a genuine headwind for the company.”