Unity Software(US:U)2024-05-13 03:32Investment Rating - The report maintains a "Buy" rating for Unity (U.US) with a target price of $31, indicating a potential upside of approximately 28% from the current price of $24.16 [4][24]. Core Insights - Unity's business is expected to stabilize, with a projected revenue of $1.78 billion for 2024, and an overall adjusted EBITDA margin of 23%. The company is anticipated to reach an inflection point in performance in the second half of the year, with a forecasted 13% year-over-year revenue growth in Q4 [4][20]. - The Create Solutions segment showed stable growth, with Q1 2024 revenue of $133 million, representing a 17% year-over-year increase, driven by subscriptions and strategic partnerships. The upcoming release of Unity 6 in late 2024 is expected to enhance the company's market position in game engines [3][20]. Financial Projections - Revenue projections for Unity are as follows: - FY22: $1.391 billion - FY23: $2.187 billion - FY24E: $1.861 billion - FY25E: $2.030 billion - FY26E: $2.265 billion [2][26]. - Adjusted EBITDA is projected to improve from a loss of $71 million in FY22 to $741 million by FY26 [2][26]. - The report anticipates a gradual recovery in performance, with the first half of 2024 expected to be the lowest point, followed by a recovery in the second half [4][20]. Market Performance - Unity's stock has shown a significant decline, with a 52-week price range of $22.2 to $50.08. The current market capitalization stands at approximately $9.443 billion [24][26]. - The report highlights that Unity's stock performance is currently under pressure but is expected to rebound as the company navigates through competitive challenges and optimizes its offerings [21][20].