AAPL - Unity Software rises as it unveils AI marketplace Wells Fargo starts coverage

2023-06-27 08:01:05 ET

Unity Software ( NYSE: U ) shares rose more than 3.5% in pre-market trading on Tuesday as investment firm Wells Fargo started coverage on the video game software company with an outperform rating and the company unveiled an AI marketplace.

Analyst Brian Fitzgerald, who also put a per-share price target of $48 on Unity Software ( U ) shares, noted that the questions about the metaverse and the ironSource acquisition cost have overshadowed a "meaningful mobile cross-sell opportunity," cost synergies and an increasing total addressable market, which creates an "attractive buying opportunity."

"We see a compelling opportunity for U to sell acquired ironSource monetization solutions (Grow) to its developer installed base (which generates 70%+ of mobile games on app stores) and think a unified platform (to develop, grow, manage, and monetize apps) is compelling in a still-fragmented ecosystem," Fitzgerald wrote in an investor note, adding the company could gain market share.

In addition, Fitzgerald said the company could gain even more cost synergies after the ironSource deal closed and potentially have an adjusted EBITDA of $250M by the fourth-quarter of fiscal 2024.

Earlier this month, Apple ( AAPL ) unveiled the Vision Pro, with Unity ( U ) apps running on the device during the presentation.

Separately on Tuesday, Unity ( U ) unveiled a dedicated place in the Unity Asset Store for AI-driven game development.

The AI marketplace will allow developers to get access to more AI solutions, including including Verified Solutions, along with community-built solutions and new technologies.

More on Unity

• Unity Vs. Roblox: One Winner And One Loser
• Unity Software: Apple's Approval Boosts Growth Tailwind (Rating Upgrade)
• Apple unveils $3,500 AR/VR headset, biggest product launch in nearly a decade

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