Unity Software (NYSE:U) Upgraded to Strong-Buy at Zacks Research

Key Points

• Zacks Research upgraded Unity Software from “hold” to “strong buy.” Other analysts also raised ratings or price targets; the consensus rating is “Moderate Buy,” with a $56.32 target.
• Unity’s latest quarter beat estimates, reporting $622.1 million in revenue, up 32.2% year over year, and earnings of $0.44 per share versus a $0.03 consensus estimate.
• Shares rose 5.6% on Thursday to $51.55, following the results and positive analyst actions.

Unity Software (NYSE:U - Get Free Report) was upgraded by analysts at Zacks Research from a "hold" rating to a "strong-buy" rating in a note issued to investors on Thursday, Zacks reports.

Several other equities research analysts also recently commented on the stock. Citizens Jmp lifted their price objective on shares of Unity Software from $45.00 to $70.00 and gave the stock a "market outperform" rating in a research note on Friday. Benchmark raised Unity Software from a "hold" rating to a "buy" rating and set a $50.00 target price on the stock in a research report on Friday, August 7th. BTIG Research restated a "buy" rating and issued a $60.00 target price (up from $53.00) on shares of Unity Software in a research note on Thursday. Raymond James Financial reaffirmed an "outperform" rating and set a $60.00 price target on shares of Unity Software in a research report on Thursday. Finally, UBS Group reaffirmed an "outperform" rating on shares of Unity Software in a research report on Friday. Two investment analysts have rated the stock with a Strong Buy rating, sixteen have assigned a Buy rating, three have issued a Hold rating and one has assigned a Sell rating to the company's stock. According to MarketBeat, the company presently has an average rating of "Moderate Buy" and a consensus price target of $56.32.

Unity Software Stock Up 5.6%

Shares of Unity Software stock traded up $2.75 during trading on Thursday, reaching $51.55. The company's stock had a trading volume of 23,615,425 shares, compared to its average volume of 8,798,267. The company has a quick ratio of 2.03, a current ratio of 2.03 and a debt-to-equity ratio of 0.55. The company has a market cap of $22.69 billion, a price-to-earnings ratio of -63.65, a P/E/G ratio of 1.69 and a beta of 2.08. The company has a 50-day simple moving average of $42.48 and a two-hundred day simple moving average of $31.84. Unity Software has a 1-year low of $16.78 and a 1-year high of $52.91.

Unity Software (NYSE:U - Get Free Report) last issued its quarterly earnings results on Thursday, November 5th. The company reported $0.44 earnings per share for the quarter, topping analysts' consensus estimates of $0.03 by $0.41. The business had revenue of $622.09 million for the quarter, compared to analyst estimates of $567.03 million. Unity Software had a positive return on equity of 4.64% and a negative net margin of 28.97%. The company's revenue was up 32.2% on a year-over-year basis. During the same quarter in the previous year, the firm earned $0.20 earnings per share. As a group, equities analysts forecast that Unity Software will post 0.55 earnings per share for the current year.

Insider Activity

In related news, SVP Rebecca Boyden sold 1,032 shares of the stock in a transaction on Tuesday, August 25th. The shares were sold at an average price of $45.32, for a total transaction of $46,770.24. Following the sale, the senior vice president directly owned 308,413 shares of the company's stock, valued at approximately $13,977,277.16. This represents a 0.33% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available at this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CFO Jarrod Yahes sold 26,017 shares of the firm's stock in a transaction on Tuesday, August 25th. The shares were sold at an average price of $45.31, for a total transaction of $1,178,830.27. Following the sale, the chief financial officer owned 678,343 shares in the company, valued at approximately $30,735,721.33. This represents a 3.69% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last 90 days, insiders have sold 109,547 shares of company stock valued at $4,884,202. 0.77% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Unity Software

A number of institutional investors have recently modified their holdings of U. Atreides Management LP acquired a new position in Unity Software in the 2nd quarter worth about $292,826,000. Resolute Advisors LLC grew its holdings in Unity Software by 473.3% in the second quarter. Resolute Advisors LLC now owns 4,766,219 shares of the company's stock valued at $136,219,000 after purchasing an additional 3,934,840 shares during the period. Assenagon Asset Management S.A. increased its position in shares of Unity Software by 9,886.8% in the third quarter. Assenagon Asset Management S.A. now owns 2,645,007 shares of the company's stock valued at $108,260,000 after buying an additional 2,618,522 shares in the last quarter. Dimensional Fund Advisors LP raised its stake in shares of Unity Software by 52.8% during the 1st quarter. Dimensional Fund Advisors LP now owns 4,245,014 shares of the company's stock worth $93,089,000 after buying an additional 1,465,962 shares during the period. Finally, Amundi raised its stake in shares of Unity Software by 4.7% during the 2nd quarter. Amundi now owns 2,334,695 shares of the company's stock worth $66,726,000 after buying an additional 105,268 shares during the period. 73.46% of the stock is currently owned by institutional investors and hedge funds.

Unity Software News Roundup

Here are the key news stories impacting Unity Software this week:

• Positive Sentiment: Q3 results beat expectations: Unity reported revenue of $622.1 million, up 32.2% year over year, and adjusted earnings of $0.44 per share. It also posted its first GAAP quarterly profit since its 2020 IPO, with net income of $122 million. Unity Q3 earnings beat estimates on Vector strength and margin gains
• Positive Sentiment: AI-driven advertising is gaining traction: Revenue from Vector, Unity’s AI-powered advertising platform, surged 126%, helping widen margins and bolstering the growth outlook. Unity Q3 earnings call highlights Vector growth and AI expansion
• Positive Sentiment: Outlook topped analyst expectations: Unity’s Q4 revenue guidance was well above consensus, with management anticipating 65%–67% growth in strategic revenue and an adjusted EBITDA margin of about 42%. Unity forecasts Q4 strategic revenue and margin
• Positive Sentiment: Analyst targets moved higher: Needham and Citizens JMP raised targets to $70; Oppenheimer and Wells Fargo raised theirs to $64, while Citigroup lifted its target to $59. Needham price-target update
• Neutral Sentiment: Takeover reports add uncertainty: Silver Lake and Saudi Arabia’s Public Investment Fund reportedly held discussions about acquiring Unity. Talks are described as early-stage, with no confirmed agreement or final terms. Silver Lake and PIF takeover approach report
• Negative Sentiment: Creator tools are a caveat: While advertising is growing rapidly, a report noted that Unity’s creator-tools business is slowing, which could temper the broader growth story if that weakness persists. Vector ads lift Unity to first GAAP profit

About Unity Software

Unity Software Inc develops software and services for creating, operating and monetizing interactive, real-time content. Its core product is the Unity engine, a development platform used to build video games and experiences for mobile devices, personal computers, consoles, augmented and virtual reality systems, and other platforms.

The company also provides tools and services that support the development and operation of interactive applications, including collaboration and cloud-based development tools, multiplayer and voice communication capabilities, analytics, advertising, and in-app monetization solutions.

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