Darden Restaurants heads into mid-July with short sellers quietly rebuilding positions even as the Street lifts price targets after a solid earnings print.
Short interest has climbed 26% over the past month, reaching 6.1% of the free float — roughly 7.1 million shares. That pace of accumulation is the more notable number: most of the move happened in the back half of June and accelerated into early July, with shares short rising another 6.4% on the week. The ORTEX short score crossed 50 on July 9, its highest reading in the series shown, up from the mid-46s just two weeks earlier. The lending market, however, tells a less alarming story. Availability remains extremely loose at 641%, meaning there are more than six shares available to borrow for every one already lent out. Borrowing costs are effectively trivial at 0.46%. This is not a squeeze setup — it is organic short selling into a stock that has been broadly flat on the week, down just 0.03%.
Options positioning is similarly calm. The put/call ratio of 1.12 sits almost exactly in line with its 20-day average of 1.12, giving a z-score near zero. The range of 0.62 to 1.41 over the past year shows DRI has traded far more defensively than this in the past; the current read is neutral, not fearful. What is notable is the directional shift: in late May and early June the PCR was consistently running above 1.20, then dropped into the 0.95–1.06 range through late June, and has since drifted back above 1.10. Options traders hedged aggressively into the June 25 earnings, relaxed after the print, and are now incrementally adding cover again.
The Street largely welcomed that June earnings result. UBS raised its target to $240 and Deutsche Bank moved to $236, both maintaining Buy. Argus followed with a $245 target. The lone dissenter in the post-earnings rush was Evercore ISI, which downgraded to In-Line on June 23 while keeping its $230 target intact — a valuation call rather than a fundamental one. The consensus sits at Buy, with a mean target of $228.25 against a price of $204.25, implying roughly 12% upside. Bulls point to 8% expected EPS growth in FY27 and Darden's brand diversification across Olive Garden, LongHorn, and Fine Dining. Bears flag June calendar headwinds — a World Cup overlap and a holiday falling on a Friday — plus longer-run margin risk from third-party delivery platforms. The P/E at 17.9x and EV/EBITDA at 13.7x have both softened modestly over 30 days, consistent with a stock that outperformed peers earlier in the year and is now digesting those gains.
The earnings reaction history suggests limited post-print volatility. The June 25 print moved the stock just 0.13% on the day, though it drifted 4.3% lower over the following five sessions. The December print produced a similar shape: a small positive day-one move, followed by a gradual fade. The next event is September 23. Among this week's peers, CAKE added 4.5% and BJRI gained 6.0%, while CBRL dropped 5.8% and BLMN fell 4.1% — the sector had no clear directional read, making DRI's near-flat week look relatively stable.
The setup heading into the back half of July is one where short sellers are adding exposure into a broadly constructive analyst environment, but doing so cheaply and without stress in the borrow market. The key question into September's print is whether the World Cup and calendar disruptions in June translate into a visible sales miss, or whether LongHorn's momentum is enough to offset them.
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