Copyright Benzinga
Unity Software Inc.'s (NYSE:U) stronger-than-expected third-quarter results vouched for momentum in its Vector platform, which drove double-digit sequential growth and strengthened the company's advertising and monetization business. The platform's machine learning improvements and new data integrations are fueling optimism for continued gains heading into 2026. Needham analyst Bernie McTernan maintained a Buy rating on Unity Software and raised the price forecast from $40 to $50. Also Read: Unity Stock Jumps After Jefferies Upgrade—Here’s What Changed McTernan reaffirmed a positive outlook on Unity Software after the company's third-quarter results exceeded expectations. The analyst said the strong performance reinforced confidence in Unity's Vector platform and its potential to deliver continued revenue beats and upward revisions to guidance. He noted that Vector revenue grew 11% quarter over quarter, surpassing management's mid-single-digit guidance. While Unity guided for similar growth in the fourth quarter, McTernan noted investors will focus on potential upside and the 2026 growth trajectory. The analyst projects 20% year-over-year growth for the Grow segment in 2026, supported by continued improvements in Vector's machine learning, new run-time data integration, and benefits from leveraging the legacy ironSource platform. He expects Vector to scale further as it processes more data and becomes more intelligent over time, helping Unity expand revenue gradually. McTernan also pointed out that 90% of new projects on Unity 6.2 now use the updated data framework with runtime integration, indicating broad developer adoption. Following the strong third-quarter results and optimistic guidance, the analyst raised his 2025 revenue forecast by 2% and adjusted EBITDA by 8%, citing stronger-than-expected growth at Vector. For 2026, he expects revenue to rise another 2% from a higher base, with modest margin expansion of 250 basis points as Unity's Create segment returns to growth. McTernan believes the Vector-driven Grow business will remain Unity's key revenue engine in the years ahead. McTernan projected fourth-quarter revenue of $485 million and EPS loss of $(0.12). Price Action: At the last check on Friday, U shares were trading 1.35% lower at $39.39 premarket. Read Next: Madison Square Garden Entertainment Posts Strong Quarter As Concerts, Holiday Shows Boost Revenue Photo: Shutterstock
