AT&T heads into its July 22 earnings date with short sellers quietly rebuilding positions and the Street lowering its targets — a shift from the picture painted just a week ago, when covering was the dominant theme.
The change in short positioning is the clearest update since the last note. Short interest has risen 23% over the past week, climbing back to 119.6 million shares, or 1.7% of the free float. That partially reverses the steep covering that ran from early June through last week. At 1.7% of float, the absolute level remains low — this is not a heavily shorted stock — but the direction has reversed. The lending market tells a different story to the short count: availability is extraordinarily loose at over 9,000% of short interest, meaning the pool of shares available to borrow dwarfs the current short position by a factor of roughly 90. Cost to borrow has also fallen sharply, down 36% on the week to just 0.25%. Borrow conditions are as easy as they come, which means new shorts face no friction if they want to add. Options traders have actually eased their defensiveness — the put/call ratio dropped to 0.72, nearly 1.6 standard deviations below its 20-day average, suggesting call-side positioning has picked up ahead of the print.
The analyst community has turned notably more cautious this week. Morgan Stanley cut its target from $30 to $25 last Tuesday while keeping an Overweight rating — a meaningful trim from a bellwether firm. Wells Fargo went further, initiating with an Underweight and a $18 target, the most bearish standalone call of the recent cluster. Barclays and Scotiabank both trimmed targets as well, with Scotiabank lowering to $29.25 on Wednesday. The consensus mean sits near $29.28 — still 38% above the current $21.28 price — but the direction of travel among active analysts is clearly downward. The bull case centres on the wireless business generating close to 70% of revenue, converged-service growth targets, and free cash flow optionality from the DirecTV divestiture. Bears point to declining ARPU, a legacy segment expected to become an EBITDA drag beyond 2027, and a payout ratio that may run above 100% through at least 2028.
Valuation has compressed alongside the stock's 10% decline over the past month. The P/E ratio has fallen roughly 1.3 points over 30 days to 9.2x, and EV/EBITDA has edged lower to 6.4x. Neither multiple screams distressed, but the compression reflects the market pricing in more caution ahead of earnings. The ORTEX short score has nudged up to 30.9, its highest of the past 10 sessions, though still far from territory that would flag genuine squeeze risk. Factor scores paint a middle-ground picture: the dividend score ranks at the 73rd percentile, a reminder that the yield continues to anchor income-oriented holders, while the analyst recommendation differential sits at just the 2nd percentile — the Street is barely differentiated on this name.
Recent earnings reactions have been mixed. The Q1 2026 release in April produced a 2.8% one-day gain before fading over the subsequent week. The May print reversed that pattern, with a 2.9% one-day drop followed by a partial 2.4% recovery over five days. Neither outcome was dramatic. Close peer VZ is down 0.3% on the week and roughly flat on the day, suggesting sector-level noise is not amplifying the AT&T setup materially.
The next thing to watch is whether the short rebuild that began this week accelerates into the July 22 print, or whether further analyst target reductions shift enough of that positioning to become meaningful — right now, the two moves are pulling in the same cautious direction without yet reaching a level that changes the fundamental story.
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