Unity has ‘fundamentally more competitive ad product,’ says Morgan Stanley

Morgan Stanley analyst Matthew Cost tells investors that the firm has observed a “marked improvement” in the commentary from Unity’s (U) advertising customers in recent weeks and now believes that Unity Ads is delivering no less than 15%-20% uplift on installs and purchases. The firm, which believes that Unity’s investments and restructuring over the past 18 months have “produced a fundamentally more competitive ad product,” highlights three reasons it sees that Unity could still be in the early innings of a re-inflection for the Grow segment: the fact that the new Vector ad model only fully launched in May, the fact that Unity Ads just started using game engine data in July and a belief that Unity 6 adoption continues to grow strongly. The firm keeps an Overweight rating and $25 price target on Unity shares.