Based in San Francisco, Unity Software (you) operates an interactive 3D content platform. I am bullish on the stock.
Are you a true contrarian investor? This question requires a bit of introspection and reflection. It’s easy to call yourself upset, but when a stock plunges and analysts lower their price targets, your instincts may be telling you to sell, not buy.
Unity Software is a go-to platform for many video game developers looking to create immersive 3D gaming experiences. If you believe in building the metaverse, then U stock should definitely be on your radar.
However, as we will discover, not all Wall Street pundits see a strong future for U stocks. Indeed, some price target declines will test your resolve as a contrarian investor. fluent.
On the other hand, you don’t have to let price target reductions get you down. Armed with compelling tax data, you can choose to go against the crowd and the negativity, and try your luck at Unity Software.
The big slap
Sometimes people who buy stocks near the top are severely punished. This is why contrarian principles of “buy low, sell high” can often save investors heartache and financial loss.
Sentiment was hot in November 2021 when U stock flirted with the $200 level. The stock had doubled in six months, and it sure seemed like the good times would never end.
However, this is when traders start to wonder, “What could go wrong? that things usually start to go wrong. U stock has been rolling after hitting near $200 and recently dropping into the low $30s.
So, is the U stock a terrific value, or just a value trap? As usual, the answer depends on who you ask. Judging by their price targets, at least two prominent Wall Street pundits seem to be leaning towards Unity Software.
First, Jefferies analyst Andrew Uerkwitz cut his price target on U stock from $100 to $40. The Jefferies analyst cited “poor proprietary customer data” as a problem and warned that Unity Software “has to relearn using the correct data and that will take time.”
Meanwhile, Stifel analyst J. Parker Lane cut his price target on U stock from $150 to $100. The odd thing about all of this, however, is that Uerkwitz gave Unity Software an Outperform rating (which is similar to a Buy rating), and Lane gave U stock a “Buy” rating. . So apparently these two analysts aren’t entirely bearish on Unity Software.
Lane even went so far as to express high hopes for Unity Software, stating, “Unity’s strong positioning in the mobile gaming space and growing set of monetization tools will help the company get back on track. tracks in a timely manner, with revenue growth picking up as the year progresses. »
Focused on massive opportunity
Thus, Unity Software suffered from a major drop in the share price and at least two price target hash jobs. Does this mean that the company is collapsing?
The answer does not lie in our emotions, but in hard data. Thankfully, Unity Software investors have powerful ammunition on their side as the company recently released its first quarter 2022 financial results.
First of all, it must be recognized that Unity Software is always striving to become a profitable company. In other words, the company’s investors should be prepared for Unity Software to suffer net profit losses for some time.
On the other hand, bulls can celebrate Unity Software’s impressive revenue growth. It turned out that the company generated revenue of $320.1 million in the first quarter of 2022, an increase of 36% compared to the first quarter of 2021.
Certain segments performed particularly well during the quarter. Specifically, Unity Software’s Authoring Solutions revenue totaled $116.4 million, up 65% year-over-year, while The company’s $184 million operating profit marked a 26% year-over-year improvement.
It’s also worth noting that Unity Software’s customer base seems to be expanding. Notably, 1,083 Unity Software customers each generated more than $100,000 in revenue in the last 12 months as of March 31, 2022. This shows an improvement from the customer count of 837 recorded as of March 31, 2021.
Buoyed by these encouraging stats, Unity Software President and CEO John Riccitiello certainly looks set to meet any future challenges and hopefully deliver another stellar quarter. “We remain focused on the huge opportunity we see ahead of us in the long term,” assured Riccitiello.
The Taking of Wall Street
According to TipRanks analyst rating consensus, U is a strong buy, based on 11 buy ratings and three hold ratings. Unity Software’s average price target is $76, implying an upside potential of 94.37%.
Given the long-term downward trajectory of U stock, it might be tempting to conclude that it is a toxic asset. The two aforementioned price target drops could also deter some potential Unity Software investors.
However, it is important to dive into the data before making a final decision on Unity Software. There is no denying that the company is increasing its revenue and making progress in expanding its customer base.
Overall, U shares look like a “buy low, sell high” opportunity for risk-tolerant investors. So don’t be afraid to flex your contrarian muscles and give Unity Software a try.
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