Raymond James upgrades Unity Software stock rating on Google partnership

Raymond James has upgraded Unity Software's stock rating to Outperform from Market Perform following a partnership announcement with Google. Analyst Andrew Marok set a price target of $54 for the stock, based on a 9x estimate of Unity's 2027 revenue of $2.55 billion. This upgrade comes after Unity has delivered stronger-than-expected execution in its Grow segment, with Vector growth and operating leverage exceeding expectations.

The company's impressive gross profit margin of 76% in the last twelve months underscores its operational strength. The Google partnership addresses concerns about the durability of Unity's creator and content funnel, as it combines Unity's technology with Google's AI and consumer distribution capabilities, providing greater confidence in Unity's Create, Runtime, and Vector business segments.

Despite a recent surge of over 104% in the past six months, Unity is currently overvalued relative to its Fair Value, according to InvestingPro data.

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