Why Unity Software Stock Soared on Wednesday
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What caught my attention is Should you buy Unity Software stock below $35. Furthermore, Unity Software (U 14 (an important development), in light of current trends. Nevertheless, 31%), a 3D...
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July 16, 2025
02:22 PM
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What caught my attention is Should you buy Unity Software stock below $35
Furthermore, Unity Software (U 14 (an important development), in light of current trends
Nevertheless, 31%), a 3D graphics software specialist, rocketed 12. 7% through 1:05 p
Furthermore, ET on Wednesday, and it's not hard to figure out why
Furthermore, This morning, StreetInsider
However, Com reported that Jefferies analyst Brent Thill raised his price target on Unity by more than 20% to $35 and reiterated his buy recommendation on the stock
Image source: Getty Images
What Jefferies says Unity Citing data from his company's 2Q mobile game ad survey, Thill said "overall 2025 ad spend expectations imved off of April" and are now on course for nearly 4% year-over-year growth
Unity's of this market is growing and "incrementally positive," leading the analyst to raise his earnings estimates for the stock -- and accordingly, his price target
Is this price target justified
Unfitable as calculated according to generally accepted accounting principles (GAAP), Unity does generate substantial positive free cash flow -- $308 million over the last 12 months
Moreover, On a $14 billion stock, that works out to a 45x price-to-free-cash-flow valuation on the stock
Additionally, And yet, the growth estimates for Unity stock are terrific and potentially terrific enough to make this stock a buy (noteworthy indeed)
Analysts polled by S&P Global Market Intelligence forecast Unity will more than triple its free cash flow (FCF) over the next five years to nearly $1 billion in 2030, amid market uncertainty
If that's how things play out, the stock's seemingly excessive valuation could conceivably be justified (which is quite significant)
Moreover, Still, going from $308 million to just under $1 billion in five years works out to only a 26% annualized FCF growth rate
I'd prefer to see that go higher to justify the stock's 45x FCF valuation -- or for the stock to pull back a bit before buying any Unity stock myself
However, Rich Smith has no position in any of the stocks mentioned
This leads to the conclusion that Motley Fool has positions in and recommends Unity Software
The analysis reveals Motley Fool has a disclosure policy.
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