Unity Software
stock was downgraded Monday by a Macquarie analyst who said trouble lies ahead despite its recent restructuring.
Analyst Tim Nollen downgraded shares of
Unity
to Underperform from Neutral while maintaining his $20 price target on the stock.
“It seems unlikely to us that the business is now discernibly improving,” Nollen wrote in a research note Monday.
Unity sparked a backlash from customers when it announced changes to its pricing structure in September. It eventually backtracked on some of the changes and Chief Executive John Riccitiello stepped down.
The company then announced it was cutting around 25% of its workforce in January in an attempt to focus on profitable, long-term growth.
Nollen believes the staff cuts won’t mask the disarray at Unity, and despite the changes the company has made so far, “we struggle to see how Unity will turn itself around so quickly.”
Not all analysts agree, though. William Blair’s Dylan Becker wrote in a research note in January that head count reduction and overall restructuring will likely help set the company up for “sustained long-term momentum into 2025 and beyond to drive a healthy combination of durable revenue growth and material free cash flow generation.”
Becker, who rates the stock as Outperform without a price target, told Barron’s on Monday nothing has changed in his view on the stock since he wrote the note.
Unity didn’t immediately respond to a request for comment from Barron’s.
Shares of the videogame developer had risen 4.1% to $35.20 on Monday afternoon. The
S&P 500
had gained 0.4%.
The stock has dropped 6.6% over the last 12 months and 15% since the start of 2024.
The company is scheduled to report fourth-quarter results on Feb. 26.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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