Arrowhead Pharmaceuticals heads into its August 4 earnings report with options traders abruptly more defensive — even as short sellers have been quietly retreating for weeks.
The sharpest signal right now is in the options market. The put/call ratio jumped to 0.61 this week, more than 2.6 standard deviations above its 20-day average of 0.40 — the most defensive reading of the past year, close to the 52-week high of 0.63. That is a meaningful shift. For most of July, the PCR sat below 0.37, suggesting call-heavy positioning. The move to put-heavy territory in the week before earnings is the kind of rotation that reflects real hedging demand, not noise.
The positioning on the short side tells a different story. Short interest has unwound sharply — down 35% over the past month to 5.7% of float, from a mid-June peak above 12.5 million shares. The borrow market is entirely consistent with that retreat: availability runs at over 2,100%, meaning there are roughly 22 shares available to borrow for every one already borrowed — as loose as it gets. Cost to borrow is just 0.59%, up modestly on the week but still firmly in the low range. The ORTEX short score has eased to 43.2 from above 50 earlier this month, reinforcing the picture of a market that has substantially de-risked a bearish thesis. Peers and both dropped on the week, down 14% and 5% respectively, while ARWR gained 3.6% — a notable divergence within the gene-silencing space that short sellers may have been unwinding into.
The Street is broadly constructive heading into the print. JP Morgan raised its target to $95 from $88 last week, maintaining Overweight. Stifel launched coverage with a Buy and a $98 target just days earlier. The mean analyst target now sits at $96, implying around 29% upside to the current $74.52 close — and the analyst recommendation divergence factor scores in the 93rd percentile, the highest of any factor score in the snapshot, indicating strong consensus lean. The bear case on the Street centres on valuation complexity, competition in RNA interference, and the need for additional financing as the company transitions to a commercial platform; the bull case rests on a crowded 2027 catalyst calendar in cardiometabolic indications and the breadth of Arrowhead's pipeline relative to single-asset peers. Leerink sits at Market Perform with a $72 target, essentially at the current price, and Bernstein's $46 target looks like an outlier relative to the cluster around $87–$100 — worth noting but difficult to reconcile with where the stock is trading. BlackRock added over 550,000 shares through June 30, and FMR (Fidelity) added nearly 750,000 in the same period, providing a steadying institutional hand ahead of the catalyst.
The earnings history adds texture to why hedging makes sense here. The last quarterly print in May triggered an 8% next-day decline, even though the stock recovered most of that over the following week. The March event was benign, a 0.7% drop. So ARWR has a pattern of sharp one-day reactions that subsequently fade — which fits neatly with the put-buying visible now: traders appear to be buying insurance against the initial move rather than expressing a structural bearish view.
What to watch: whether the put/call ratio retreats after August 4 as hedges expire, or whether it stays elevated — that divergence would signal whether the caution is tactical or something more durable.
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