BTIG has reduced its price target for Unity Software (NYSE: U) to $41.00 from $60.00 but kept a Buy recommendation, citing Unity’s move to shut down its ironSource ad unit. The revised target still sits well above the prevailing share price of $21.87, a gap that aligns with broader analyst sentiment showing an average target roughly 30% higher than the current market level.
Year-to-date the shares have been notably volatile, with InvestingPro data showing a decline of 34.21% through the current reporting period. That performance reflects investor uncertainty as Unity transitions away from legacy ad operations while positioning for new growth initiatives.
On results, Unity reported fourth-quarter strategic revenue in line with the company’s above-guidance expectations and posted EBITDA that surpassed consensus estimates. The company’s Vector platform expanded by approximately 15% quarter-over-quarter, however that growth rate came in below buy-side expectations of 20% or greater.
Despite the mixed top-line signals, Unity retains a strong liquidity position with a reported current ratio of 2.78, indicating that short-term obligations are well covered by liquid assets. Management’s outlook calls for roughly 10% quarter-over-quarter Vector growth in Q1, and Unity projects an exit run rate for Q4 2026 that will comfortably exceed $250 million. BTIG models more than 50% top-line growth for Vector across full-year 2026.
BTIG flags the ironSource shutdown as a significant drag on 2026 revenue growth, estimating the impact could exceed $150 million. That said, the firm expects the move to benefit profitability and margins, noting Unity has guided to roughly 300 basis points of EBITDA margin improvement as the legacy business is phased out.
BTIG further comments that, at a share price near $21, Unity appears to have been largely repriced to reflect concerns around generative AI, competitive pressure from Meta, and the wind-down of ironSource. The analyst believes this recalibration creates a cleaner platform for the company’s planned growth initiatives slated for the first half of 2026.
Independent InvestingPro analysis cited alongside the BTIG view suggests Unity may be undervalued relative to its Fair Value despite trading at an elevated revenue multiple. The company was not profitable over the last twelve months, but consensus analyst estimates project a return to profitability with an EPS forecast of $0.89 for fiscal 2025.
In related disclosures, Unity posted Q4 2025 earnings that topped expectations, recording a 14.29% surprise in earnings per share and a 2.89% revenue surprise versus analyst forecasts. Nevertheless, the stock suffered a material pre-market decline following the report, indicating some investor concern even amid the beat. The earnings surprise underscores that the quarter outperformed forecasts, while the subsequent share reaction highlights market reservations about forward growth or market dynamics.
Investors seeking deeper, subscription-based analysis can access Unity’s Pro Research Report, which InvestingPro describes as containing additional ProTips and expanded coverage across a broad set of U.S. equities.
Analytical note - The current picture combines an above-guidance quarter with operational changes that compress near-term revenue but are intended to structurally improve margins. Liquidity metrics remain supportive, and forward Vector growth assumptions are a central driver of 2026 expectations.