Unity Software (U) Soars 6.6%: Is Further Upside Left in the Stock?

Unity Software Inc. U shares soared 6.6% in the last trading session to close at $27.86. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4% gain over the past four weeks.

Unity Software is benefiting from the strong early performance of its AI-powered ad platform Unity Vector, growing adoption of Unity 6 across users and double-digit subscription revenue growth, while positioning itself for profitable expansion by shifting toward high-margin services.

This company is expected to post quarterly loss of $0.26 per share in its upcoming report, which represents a year-over-year change of +18.8%. Revenues are expected to be $425.02 million, down 5.4% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Unity Software, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on U going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Unity Software belongs to the Zacks Internet - Software industry. Another stock from the same industry, nCino NCNO, closed the last trading session 0.4% higher at $28.8. Over the past month, NCNO has returned 5.1%.

For nCino, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.13. This represents a change of -7.1% from what the company reported a year ago. nCino currently has a Zacks Rank of #1 (Strong Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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