Unity stock could climb sharply to $56 – analyst says

Unity Software Inc (NYSE: U) is an attractive buy now that it has lost 25% in about two months, says a Bank of America analyst.

Unity stock has 57% upside from here

Michael Funk raised his price target on the video game software development company today to $56 which suggests a 57% upside from here.

The analyst is bullish on Unity stock partially because of an appealing risk-reward profile. His research note reads:

With well-understood idiosyncratic execution and integration risks abating, we expect the stock to re-rate higher.

Last month, the California-based company reported its financial results for the second quarter that topped Street estimates (find out more). Unity expects its full-year revenue to print between $2.12 billion and $2.2 billion – the top end of that range represents a 58% annualised growth.  

Why else is he bullish on Unity stock?

Michael Funk expects Unity Software Inc to benefit from a continued increase in mobile gaming.

The Bank of America analyst is convinced that the New York listed firm will successfully monetise its mobile video game development tool.

Improved monetisation of Unity’s industry leading mobile game creation engine paired with stabilising mobile game advertising market create a compelling risk-reward profile.

The San Francisco-headquartered firm has recently launched an AI marketplace as well (source). Ad business will likely serve as another potential catalyst for Unity stock, as per Funk who increased his estimates for the company’s revenue over the next two years by 4.4% and 9.9% on Friday.