Unity Software Inc. Stock Surges on Morgan Stanley Upgrade: What You Need to Know
Unity Software Inc. (NYSE: U) saw a significant boost in pre-market trading after Morgan Stanley upgraded its rating on the company to "overweight" from "equal-weight." At 8:52 am (1252 GMT), Unity Software Inc. was trading 7.3% higher in pre-open trade, signaling renewed investor interest.
The upgrade was driven by derisked growth expectations and potential upside opportunities in Unity's core business segments, according to analysts at Morgan Stanley. Despite facing challenges such as underperformance and management turnover, Unity has maintained its competitive edge in the gaming industry, with a 70% market share in the mobile sector.
Looking ahead, Morgan Stanley identified factors that could drive Unity's growth in the coming years, including increased pricing power, the introduction of a runtime fee, and the rebuild of Unity’s advertising algorithm. These developments could lead to upward revisions in Unity's earnings projections for 2026 and beyond.
From a valuation perspective, Morgan Stanley maintained its price target for Unity at $22, representing a 32% upside from current levels. The brokerage also presented a bullish scenario where the stock could reach as high as $45, highlighting the attractive risk-reward profile of Unity at this time.
With shares trading near all-time lows in price and valuation multiples, Morgan Stanley views this as a compelling entry point for investors. Overall, Unity Software Inc.'s recent performance and growth prospects make it a stock to watch in the market.
