Unity Software (U) presents a Vector growth runway sustainable through year-end 2027, with only games built on Unity 6 currently feeding data into Vector, as the company actively expands coverage to older titles, BofA Securities said in a note Friday.

The brokerage sees Unity Ads' "blowout quarter" as an inflection point, which provides the first financial validation that runtime data can improve the efficacy of Vector's targeting model and reinforcing the narrative that Unity is following AppLovin's (APP) path to becoming a scaled user acquisition channel for mobile gaming advertisers, according to the note.

Q3 guidance for Unity Grow surpassed investor expectations, implying 20% sequential growth for Vector, the firm noted. BofA believes the lack of acceleration versus Q2 despite a full quarter of runtime data contribution suggests the guidance is conservative.

The brokerage sees Vector sustaining quarter-over-quarter growth of more than 20% in Q3 and Q4, while most investors doubted it could maintain even 15% growth.

BofA upgraded Unity Software to buy from neutral and raised its price target to $50 from $30.

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