YB new stock pitches (Tue, Jun 2)

Unity Software ($U) is a turnaround story that appears to be working as its strategic Grow segment enters hypergrowth, driven by its new proprietary ad network Vector—Unity's answer to AppLovin (APP). The company went out of its way to pre-release Q1 2026 results, guiding for revenue of $505-508M (up ~16% YoY from $435M in Q1 2025, with Grow revenue growth approaching 50%) and Adjusted EBITDA of $130-135M (vs. $84M prior year), implying massive incremental EBITDA margins of 65-70%, approaching APP levels. The bull thesis holds that the ad market is large enough for a duopoly since advertisers don't want to be held hostage to one network's pricing; as APP introduced e-commerce advertisers into its bidding system, game developers' acquisition costs rose, pushing them to seek alternatives like Unity. Showing confidence in Vector, management is sunsetting the ironSource Ads Network (effective April 30th) and has engaged a financial advisor to divest its Supersonic game publishing business, going all-in on Vector much like APP did getting rid of its gaming studios to focus on MAX—moves expected to drive faster revenue growth, higher Adjusted EBITDA, and improved margins while removing slower-growth non-core assets. On rough valuation, assuming Create grows 15% to ~$655M, Grow grows 12% sequentially to ~$1,333M, non-core LTM revenue of ~$340M sold at 1x, and cash offsetting convertible debt, Unity trades at roughly 4x 2026 revenue for a company growing 30-40% annually—appearing cheap. Catalysts include continued Vector revenue growth and the divestiture of slow-growing assets.

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STMicroelectronics ($STM) presents incredible risk/reward, with consensus 2027 EPS of $2.40 viewed as far too low and $3 in 2027 (23x) considered a layup. The company is the global SiC leader with over one-third market share, actively building out its portfolio for datacenter content, with 800v EV expertise providing a competitive advantage and management seen as sandbagging. Multiple catalysts converge: the STM32 MCU ecosystem is excellent and troughed with ASPs likely to rise over time; direct SpaceX exposure as sole-source on BiCMOS phased array chips for dishes, with SpaceX expected to signal massive satellite and dish expansion on its roadshow next week (OSIL content also in play); optics/CPO exposure via the PIC100 300mm line in Crolles with Amazon involvement/investment, with CPO being pulled in faster than expected amid tight ecosystem capacity; and multiple price increases pushed through by Infineon and peers. The 39% gross margin for 2027 is seen as laughably low, with a 300bps lift achievable from Ute alone (no pricing/mix needed), while optics and 800v hit simultaneously. Across analog IDMs, capex has been slashed from peaks (benefiting TXN/STM with huge 300mm capacity), pricing comes through, and inventory works down to lift WC/FCF—all at once. STM is pinned to every strong thematic, trading cheaply versus richly valued European industrials.

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Cosmo Pharmaceuticals (COPN.SW), a Swiss biotech with a USD $1.775bn market cap and $1.575bn enterprise value, is positioned to commercialize Breezula in 2028—potentially the first FDA-approved drug for male pattern hair loss (MPHL) in over 30 years. Breezula is a 2x daily topical androgen receptor antagonist (active ingredient clascoterone) offering finasteride-like efficacy without the sexual/mental side effects (lowered libido, depression, ED, brain fog, suicidal ideation) that stigmatize finasteride, and it addresses the underlying cause of hair loss—unlike minoxidil, whose benefits fade after roughly a year. The MPHL market is massive and underserved, with over 50m diagnosed US men (~90m undiagnosed), two-thirds seeking treatment, and strong demonstrated demand (finasteride scripts tripled in 7 years, Nutrafol grew 4x since 2021 to a ~$1bn run rate). Clascoterone is already FDA-approved for acne as Winlevi (1.6m TRxs since Nov '21 with negligible side effects); Breezula uses 5x the dose but P2 and interim P3 data show a similar safety profile, with patents through 2036. December P3 headline efficacy results were statistically significant (539% and 168% relative improvement vs placebo across arms, significant patient-reported outcomes, placebo-like TEAEs), sending the stock up 100% before it retraced on a capital raise, MANE's IPO, and Kintor's Chinese data; full safety/efficacy data is due within 1–3 months, with NDA filing targeted by year-end. Cash-pay launch is expected around $100/month via a commercialization partner, with COPN earning ~20% royalty plus a $10-15/month/patient manufacturing fee (~30% total rev share). At 10% share (5m patients), this implies ~$6bn peak revenue (~$1.8bn to COPN at ~90% blended EBIT margin = $1.6bn incremental EBIT, $1.2bn incremental NI), with significant upside from market expansion and no peers like minoxidil-based MANE (Veradermics) or China's Kintor offering an FDA-approvable, root-cause solution. COPN also has other programs guiding to EUR 105-110m revenue and EUR 10.5-13.5m EBITDA in 2026, ~EUR 200m cash with no debt, and a EUR 2.10 dividend on May 11. Key catalysts are the full Phase 3 readout, FDA approval, and licensing terms; key risks over the next 12 months are a data flop or delay, a slower-than-expected FDA approval process, and securing a poor US partner. An FDA approval and successful rollout could deliver multi-bagger upside.

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