Unity Software announced the acquisition of RestAR, an Israel-based computer vision and deep learning company. However, the financial terms of the deal were not disclosed.
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Commenting on the deal, Unity (U), a video game software developer, said, “RestAR will extend the power of interactive RT3D (real-time 3D) technology to marketers of all types by generating a digital twin of any product or object in 3D.”
Unity’s Dave Rhodes, noted “With the acquisition of RestAR, Unity is giving massive power to brands, retailers, and consumers by democratizing digital marketing for almost any product.”
He added, “What was once out of reach for those outside of large manufacturers and consumer products companies, is now available to businesses of any size looking for a tangible, effective way to market their products. We fundamentally believe anyone should be able to leverage Unity’s products and this acquisition is another step in that direction.”
The deal comes after Unity last month reported its first earnings since IPO. The company posted an adjusted loss of $0.09 per share in the third quarter, which narrowed from the year-ago loss of $0.67 per share. Meanwhile, revenue jumped 53.3% year-over-year to $200.8 million.
Shares have gained 111.5% since the stock was listed on NYSE on Sept. 18, 2020. (See U stock analysis on TipRanks)
On Nov. 30, Oppenheimer analyst Andrew Uerkwitz downgraded the stock from Buy to Hold, citing its expensive valuation. The analyst thinks that the stock has significantly outperformed its software-as-a-service peers and it is time for investors to book profits.
In a note to investors, Uerkwitz said, “we love Unity and firmly believe the creative market will see exceptional expansion over the long term.” “Moreover, we see several paths to near-term beat/raises,” he added. However, he believes, “in every scenario the vast majority of upside to our price target would come from the terminal value and more robust assumptions. We can’t stretch any further on valuation.”
Overall, the rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 7 Buys and 4 Holds. Following the recent share rally, the average price target stands at $107.56 and implies downside potential of about 25.6% to current levels.
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