Unity Software (U)
Entry: Unlock
Stop loss: Unlock
Price target: 23.50-25.00
Second PT: Unlock
Analysis done on hourly timeframe. Unity Software is the leading global platform for creating real-time 3D content. The company is best known for games like Pokémon GO and Among Us, but investors are now focusing on Unity's collaboration with Apple’s Vision Pro. Unity’s visionOS beta program launched in 2023, allowing creators to deliver Apple’s first spatial computing experiences, essentially virtual reality games and experiences.
It’s well known that Apple’s partners often benefit from the growth that flows from the tech giant, although Unity has yet to fully experience this. The Vision Pro is still new, and virtual reality itself has yet to be widely adopted, but long-term investors see potential in this space. Unity’s past success with multiple hit games gives it a strong chance of replicating that success, this time with Apple’s Vision Pro.
The main reason Unity made it onto our watchlist this week, however, is due to a change in its pricing policy. The company drove investors away over the past 12 months after announcing a “runtime fee” for developers. This change was unpopular, and it negatively impacted both the company and its stock. Unity’s quarterly revenue fell by 8% in Q1 and 16% in Q2 of 2024, which contributed to the stock hitting a new 52-week low last month. The company has since announced it will no longer implement the runtime fee and also revealed a price hike starting January 1, 2025. Subscription prices will increase by 8-25%, which should help Unity recover some of its lost revenue.
Please note that this may take beyond this week to come around to price targets.
Draftkings (DKNG)
Entry: Unlock
Stop loss: Unlock
Price target: 44.00-46.00
Second PT: Unlock
Analysis done on hourly timeframe. America’s sports-betting habit continues to grow and companies like Draftkings are reaping the benefits. Online sports betting grew from a market cap of $7.75 billion in 2022 to $11.02 billion in 2023. That number is projected to more than double by 2030 about $25 billion. This trend is bad news for consumer wallets, but it is great news for companies like Draftkings and Penn Entertainment.
Draftkings’ revenue trends are a clear reflection of the online sports betting market growth, reflecting a 73% and a 64% gain in revenue in the last two years. The company accomplishment a big milestone last quarter when they finally reported positive net income, reassuring investors of their position. Although they initially dropped on earnings, they’ve come around and are now retesting a major pivot mark at 40.00. We’re looking for a move above that level to begin a further rally to 44.000-46.00.
Please note that this may take beyond this week to come around to price targets.
Target (TGT)
Entry: Unlock
Stop loss: Unlock
Price target: 165.00-168.00
Second PT: Unlock
Analysis on the hourly timeframe. Target earned a spot on our watchlist this week due to the latest economic update regarding consumer optimism. Friday's Consumer Sentiment Index marked the third consecutive month of rising consumer sentiment, which bodes well for "premium" big-box retailers like Target. The company has faced multiple challenges in recent years, including public relations issues and difficulties in selling large items. However, recent warehouse inventory reports indicate that unsold goods are beginning to decrease.
These headwinds pushed the stock lower in 2023, but it has since rebounded, up 50% from last year’s lows as investors are starting to re-enter.
Despite the stock being up 50% from its 52-week lows, it is still trading at an attractive valuation. Target's stock currently has a price-to-earnings ratio of 15x, significantly lower than Walmart's 41x, making Target appear "cheaper" in terms of valuation. It likely won't be long before investors take notice.
In the short term, we expect Target's stock to continue moving higher, supported by last week’s positive consumer sentiment data and the potential for lower interest rates. Even for long-term investors, Target remains a solid option to consider for a multi-year investment.
Please note that this may take beyond this week to come around to price targets.
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The stocks posted are the preliminary stocks and set ups we’ll be watching this week. All price points are subject to change based on market performance and sector health. Please do your own research and analysis on these companies/charts before taking on any set ups. Trade at your own risk and as always, good luck! Let’s have a fantastic week.