Unity Software Inc. shares rallied more than 15% on Tuesday after the software company introduced a new marketplace focused on artificial intelligence and an analyst highlighted overlooked opportunities from a recent acquisition.
Unity
U,
shares rose 15.4% to close near highs of the day at $42.38, compared with a 1.1% gain by the S&P 500 index
SPX,
On Tuesday, Wells Fargo analyst Brian Fitzgerald initiated coverage of Unity shares with an overweight rating and a $48 price target. Fitzgerald said in a note that “waning metaverse hype” and questions about IronSource being the “right asset, wrong price, inopportune time” have “overshadowed a meaningful mobile cross-sell opportunity, cost synergies, and Industry [total addressable market] —creating an attractive buying opportunity.”
Also on Tuesday, Unity said it launched a “dedicated AI marketplace” on its site for verified- and community-built software for developers.
Earlier in June: Unity stock rockets on Apple Vision Pro partnership
Nearly a year ago, IronSource agreed to be acquired by Unity for $4.4 billion, and the deal closed in November, after AppLovin Corp.
APP,
abandoned its $20 billion offer to buy Unity in September. AppLovin shares appeared to gain a tailwind Tuesday, closing up 7.7% at $26.04.
“We see a compelling opportunity for Unity to sell acquired IronSource monetization solutions…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 said in a Tuesday note.
Read, from May: AppLovin, Unity stocks soar as investors see mobile-ad market bottoming, but analysts are still cautious
Of the 25 analysts who cover Unity, 12 have buy-grade ratings, including Fitzgerald, 10 have hold ratings and three have sell ratings, along with an average target price of $39.60, according to FactSet data.
Unity shares are up 48.2% on the year, while AppLovin shares have soared 147%. In comparison, the iShares Expanded Tech-Software Sector exchange-traded fund
IGV,
is up 33% and the First Trust Cloud Computing ETF
SKYY,
has gained 29.2%. Meanwhile, the S&P 500 is up 14% for the year, while the tech-heavy Nasdaq Composite
COMP,
is up 29.5%.
