Shares of Unity Software Inc. (U) declined 2% Tuesday after the stock was downgraded by Piper Sandler. Analysts lowered their rating on the stock to Underweight from Neutral and issued a price target of $35 ($20 previously).
Piper Sandler is positive on application software overall, but after shares of Unity surged 35% in one month it looks less attractive.
Unity Software’s “35% 1-mo move leaves little margin for error,” analysts noted.
The firm’s new $35 price target is based on 30x CY28E EV/FCF, discounted back 3 years by 16%.
Unity’s stock closed at $40.89 on Friday, so the $35 price target implies downside of about 14%.
Piper Sandler's top ideas in the cloud application software space include Workday (NASDAQ:WDAY), Snowflake (NYSE:SNOW), monday.com Ltd. (MNDY (NASDAQ:MNDY)), Klaviyo (NYSE:KVYO), and Global-e Online (GLBE).