Unity Software (NYSE: U) experienced a notable shift in investor sentiment as Wall Street Zen downgraded its stock from a “buy” rating to a “hold” in a research report released on October 31, 2023. This downgrade follows a series of mixed evaluations from various analysts, indicating a complex landscape for the company’s shares.
On the same day, BTIG Research upgraded Unity Software’s rating from “sell” to “neutral,” reflecting a cautious optimism about the company’s future. Meanwhile, Morgan Stanley raised its target price for Unity from $40.00 to $44.00, assigning an “overweight” rating in a report dated October 20, 2023.
Analysts’ opinions are divided, with Arete Research also assigning a “hold” rating on October 16, 2023, while Weiss Ratings maintained a “sell (d-)” rating on October 8, 2023. Barclays chimed in on November 6, increasing its target price from $30.00 to $35.00, labeling the stock as “equal weight.” Currently, one equities research analyst rates the stock as a Strong Buy, eight analysts have issued a Buy rating, twelve have assigned a Hold rating, and two have given a Sell rating. According to MarketBeat.com, Unity Software has a consensus rating of “Hold” with an average target price of $38.40.
Recent Financial Performance
Unity Software last reported its quarterly earnings on November 5, 2023. The company announced earnings per share (EPS) of $0.20 for the quarter, surpassing analysts’ expectations of $0.17 by $0.03. Revenue for the quarter reached $470.62 million, exceeding predictions of $452.87 million. This marks a year-over-year revenue increase of 5.4%, compared to a loss of ($0.31) EPS in the same quarter last year.
Despite positive revenue growth, Unity Software reported a negative net margin of 24.15% and a negative return on equity of 9.45%. Analysts anticipate that the company will post an EPS of -1.25 for the current year, with guidance for Q4 2025 yet to be specified.
Insider Transactions and Institutional Investments
In additional news, significant insider trading activity has occurred. Chief Financial Officer Jarrod Yahes sold 29,876 shares on August 25, 2023, at an average price of $39.32, totaling approximately $1.17 million. Following this transaction, Yahes retained 638,504 shares, with a value of about $25.1 million. This sale represented a 4.47% reduction in his holdings.
Similarly, Chief Operating Officer Alexander Blum sold 63,813 shares on August 27, 2023, at an average price of $39.41, amounting to approximately $2.51 million. Blum now holds 603,811 shares, valued at around $23.8 million, reflecting a 9.56% decrease in his ownership.
Overall, insiders have sold 2,414,283 shares worth approximately $102.5 million over the past 90 days, with insiders currently owning 3.61% of the company’s stock.
Institutional investors have also been active. Recent transactions include CX Institutional acquiring a new stake in Unity Software valued at $25,000, while Root Financial Partners LLC purchased shares worth about $27,000 in the third quarter. Other institutions, such as Banque Transatlantique SA and Atlantic Union Bankshares Corp, have made similar investments, bringing institutional ownership to 73.46% of Unity Software’s stock.
Unity Software operates a real-time 3D development platform that provides software solutions for creating, running, and monetizing interactive content across various devices, including mobile phones, tablets, and virtual reality systems. The company’s products are available through its online store and field sales in numerous countries, including the United States, the United Kingdom, and Japan.
As analysts adjust their ratings and institutional investors reposition themselves, the future trajectory of Unity Software remains a focal point for investors and market watchers alike.
