Unity Software (NYSE:U) Stock Sees Heavy Call Option Buying

Key Points

• Unity Software saw unusually heavy call-option activity, with traders purchasing 85,749 calls—196% above the average volume of 28,980.
• The stock traded at $46.73, near its 52-week high, while the company reported quarterly revenue of $546.47 million, up 24% year over year, and earnings that exceeded analyst expectations.
• Analyst sentiment remains broadly positive, with a consensus “Moderate Buy” rating and a $47.05 price target; however, insiders sold shares primarily to cover tax obligations, and institutional investors own 73.46% of the stock.

Unity Software Inc. (NYSE:U - Get Free Report) was the recipient of some unusual options trading on Tuesday. Traders acquired 85,749 call options on the company. This represents an increase of 196% compared to the average volume of 28,980 call options.

Unity Software Price Performance

Shares of U traded up $0.05 during trading hours on Tuesday, hitting $46.73. 3,257,117 shares of the company were exchanged, compared to its average volume of 12,751,882. The firm has a fifty day simple moving average of $43.23 and a 200-day simple moving average of $32.82. The company has a market capitalization of $20.57 billion, a PE ratio of -34.33, a PEG ratio of 2.05 and a beta of 2.11. Unity Software has a one year low of $16.78 and a one year high of $52.15. The company has a debt-to-equity ratio of 0.55, a current ratio of 2.03 and a quick ratio of 2.03.

Unity Software (NYSE:U - Get Free Report) last issued its quarterly earnings results on Thursday, August 6th. The company reported $0.28 earnings per share for the quarter, beating analysts' consensus estimates of ($0.11) by $0.39. Unity Software had a positive return on equity of 4.64% and a negative net margin of 28.97%. The business had revenue of $546.47 million for the quarter, compared to the consensus estimate of $514.72 million. During the same quarter in the previous year, the company posted $0.18 earnings per share. Unity Software's revenue for the quarter was up 24.0% compared to the same quarter last year. As a group, sell-side analysts predict that Unity Software will post 0.55 earnings per share for the current year.

Analyst Ratings Changes

A number of analysts have recently weighed in on U shares. Wells Fargo & Company increased their price target on Unity Software from $48.00 to $53.00 and gave the stock an "overweight" rating in a research report on Monday. BTIG Research boosted their target price on shares of Unity Software from $51.00 to $53.00 and gave the company a "buy" rating in a research note on Friday. HSBC upgraded Unity Software from a "hold" rating to a "buy" rating and set a $47.10 target price on the stock in a research report on Friday, August 7th. Morgan Stanley lifted their price objective on shares of Unity Software from $50.00 to $55.00 and gave the company an "overweight" rating in a research note on Tuesday. Finally, Zacks Research lowered shares of Unity Software from a "strong-buy" rating to a "hold" rating in a research report on Tuesday, October 6th. One research analyst has rated the stock with a Strong Buy rating, eighteen have given a Buy rating, three have assigned a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat.com, the stock currently has an average rating of "Moderate Buy" and a consensus target price of $47.05.

Insider Buying and Selling

In related news, CFO Jarrod Yahes sold 26,017 shares of Unity Software stock in a transaction dated Tuesday, August 25th. The stock was sold at an average price of $45.31, for a total transaction of $1,178,830.27. Following the completion of the sale, the chief financial officer owned 678,343 shares in the company, valued at approximately $30,735,721.33. This trade represents a 3.69% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Matthew Bromberg sold 16,383 shares of the company's stock in a transaction that occurred on Tuesday, August 25th. The stock was sold at an average price of $45.31, for a total transaction of $742,313.73. Following the transaction, the chief executive officer directly owned 1,541,131 shares of the company's stock, valued at $69,828,645.61. This trade represents a 1.05% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last three months, insiders sold 109,547 shares of company stock worth $4,884,202. 0.77% of the stock is currently owned by corporate insiders.

Institutional Trading of Unity Software

A number of institutional investors and hedge funds have recently modified their holdings of the company. Renaissance Technologies LLC bought a new position in shares of Unity Software in the 1st quarter worth $54,534,000. Entropy Technologies LP acquired a new position in Unity Software in the first quarter valued at about $1,985,000. Corient Private Wealth LP lifted its holdings in shares of Unity Software by 194.1% during the 2nd quarter. Corient Private Wealth LP now owns 48,691 shares of the company's stock valued at $1,392,000 after purchasing an additional 32,135 shares in the last quarter. HB Wealth Management LLC grew its position in shares of Unity Software by 10.8% in the 2nd quarter. HB Wealth Management LLC now owns 274,554 shares of the company's stock valued at $7,847,000 after purchasing an additional 26,762 shares during the period. Finally, Susquehanna Fundamental Investments LLC raised its holdings in Unity Software by 1,196.6% during the 2nd quarter. Susquehanna Fundamental Investments LLC now owns 150,611 shares of the company's stock worth $4,304,000 after buying an additional 138,995 shares during the period. 73.46% of the stock is currently owned by institutional investors.

About Unity Software

Unity Software Inc develops software and services for creating, operating and monetizing interactive, real-time 2D and 3D content. Its platform is widely used to build video games for mobile devices, personal computers, consoles and the web, as well as applications for industries such as automotive, architecture, engineering, construction, manufacturing and entertainment.

The company's core offering is the Unity development platform, which includes tools for graphics, physics, animation, audio, scripting and cross-platform deployment.

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