After Unity (U) announced a new partnership with Epic Games, the maker of Fortnite, Morgan Stanley contends that the partnership helps position Unity as the “picks and shovels” winner in direct payments as adoption grows. Every 10% penetration could drive 20% upside to EBITDA, estimates the analyst, who sees the moats around Unity’s engine deepening. However, this “actually reinforces” Roblox’s (RBLX) dominant position in User-Generated Content gaming, adds the analyst. The firm keeps an Overweight rating on Unity shares with a $48 price target.
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