Unity Software (NYSE:U) Trading 12.3% Higher on Strong Earnings

Key Points

• Unity Software shares jumped 12.3% after the company reported quarterly EPS of $0.28, beating the $0.11 loss expected by analysts, while revenue of $546.47 million exceeded estimates and rose 24% year over year.
• Analyst sentiment remains positive, with a consensus rating of “Moderate Buy” and an average price target of $38.49; Piper Sandler also raised its target to $45.
• Institutional investors own 73.46% of Unity’s shares, while insiders sold $5.39 million worth of stock over the past three months, primarily to cover tax obligations tied to vested equity awards.

Unity Software Inc. (NYSE:U - Get Free Report)'s share price was up 12.3% on Thursday following a stronger than expected earnings report. The company traded as high as $40.70 and last traded at $39.8420. 9,665,249 shares changed hands during mid-day trading, a decline of 27% from the average session volume of 13,305,749 shares. The stock had previously closed at $35.47.

The company reported $0.28 EPS for the quarter, topping analysts' consensus estimates of ($0.11) by $0.39. Unity Software had a negative net margin of 34.99% and a negative return on equity of 1.30%. The firm had revenue of $546.47 million during the quarter, compared to the consensus estimate of $514.72 million. During the same quarter in the previous year, the firm posted $0.18 earnings per share. The company's revenue was up 24.0% compared to the same quarter last year.

Wall Street Analysts Forecast Growth

Several brokerages have recently weighed in on U. Zacks Research upgraded shares of Unity Software from a "hold" rating to a "strong-buy" rating in a research report on Monday, July 13th. Piper Sandler restated an "overweight" rating and set a $45.00 target price (up from $40.00) on shares of Unity Software in a research report on Thursday, July 30th. Citigroup reduced their price target on shares of Unity Software from $43.00 to $40.00 and set a "buy" rating for the company in a research report on Thursday, April 30th. Wedbush increased their price target on shares of Unity Software from $32.00 to $36.00 and gave the stock an "outperform" rating in a research note on Wednesday, July 22nd. Finally, Needham & Company LLC lifted their price objective on shares of Unity Software from $35.00 to $40.00 and gave the company a "buy" rating in a research note on Friday, May 8th. Two investment analysts have rated the stock with a Strong Buy rating, twelve have assigned a Buy rating, eight have assigned a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat, the company currently has an average rating of "Moderate Buy" and a consensus price target of $38.49.

Insider Activity

In related news, CAO Mark Barrysmith sold 13,247 shares of Unity Software stock in a transaction that occurred on Tuesday, May 26th. The stock was sold at an average price of $27.18, for a total transaction of $360,053.46. Following the completion of the transaction, the chief accounting officer directly owned 370,654 shares in the company, valued at $10,074,375.72. The trade was a 3.45% decrease in their position. The sale was disclosed in a document filed 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 24,021 shares of the company's stock in a transaction on Tuesday, May 26th. The shares were sold at an average price of $27.18, for a total value of $652,890.78. Following the completion of the sale, the chief financial officer owned 704,360 shares in the company, valued at $19,144,504.80. This represents a 3.30% decrease in their ownership of the stock. 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. Insiders sold a total of 198,321 shares of company stock worth $5,390,783 in the last three months. Company insiders own 0.77% of the company's stock.

Institutional Trading of Unity Software

Large investors have recently added to or reduced their stakes in the stock. Renaissance Technologies LLC acquired a new position in shares of Unity Software in the 1st quarter valued at $54,534,000. Entropy Technologies LP purchased a new stake in Unity Software in the 1st quarter worth about $1,985,000. Massachusetts Financial Services Co. MA lifted its stake in Unity Software by 9.5% in the 4th quarter. Massachusetts Financial Services Co. MA now owns 2,905,820 shares of the company's stock worth $128,350,000 after acquiring an additional 252,648 shares in the last quarter. FengHe Fund Management Pte. Ltd. boosted its position in Unity Software by 287.0% during the 4th quarter. FengHe Fund Management Pte. Ltd. now owns 1,732,002 shares of the company's stock worth $76,503,000 after acquiring an additional 1,284,400 shares during the period. Finally, KBC Group NV grew its stake in Unity Software by 511.9% during the 4th quarter. KBC Group NV now owns 51,960 shares of the company's stock valued at $2,295,000 after acquiring an additional 43,468 shares in the last quarter. 73.46% of the stock is currently owned by institutional investors and hedge funds.

Unity Software Trading Up 12.2%

The company has a market cap of $17.37 billion, a PE ratio of -25.24, a PEG ratio of 4.17 and a beta of 2.04. The company has a debt-to-equity ratio of 0.56, a quick ratio of 1.95 and a current ratio of 1.95. The company has a 50 day simple moving average of $29.67 and a two-hundred day simple moving average of $26.57.

About Unity Software

Unity Software is a leading provider of a real-time 3D development platform that enables creators across industries to design, build and operate interactive, real-time experiences. Originally focused on the game development market, Unity's technology now extends into sectors such as film, automotive, architecture, engineering and construction, delivering immersive content for mobile, desktop, console, augmented reality and virtual reality devices. The company's core offering comprises a suite of authoring tools, runtime engines and cloud services that streamline the creation and deployment of interactive 3D applications.

The Unity Editor serves as the central hub where developers design scenes, script behavior and iterate on assets.

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