HSIC shorts retreat ahead of next week's earnings

Henry Schein heads into its August 4 earnings report with shorts unwinding, analysts lifting targets, and options traders the most call-heavy they've been in months.

Short sellers have been cutting exposure at a notable pace. SI as a percentage of the free float dropped to 5.3% — down more than 10% on the week and roughly 22% over the past month, falling from a high of around 8% in mid-June to current levels. The share count shorted is now close to 6.2 million, the lowest in the 30-day window. Borrowing costs are creeping higher — up 29% on the week to 0.52% — but remain firmly in "easy borrow" territory. More tellingly, borrow availability has loosened dramatically: availability has expanded to 777%, well above the 52-week low of 233%, signalling there is no constraint on new short positioning. The lending market is not tight. The picture that emerges is one of shorts exiting rather than new bears pressing in.

Options positioning reinforces the cautiously constructive tone. The put/call ratio has ticked up to 0.38 from its 20-day average of 0.38 — technically two standard deviations above that mean, but the absolute level remains low. This is a call-dominated market. The 52-week low on the PCR is 0.05, the high is 0.54; the current reading is near the bottom of that range, meaning options buyers are tilting firmly toward calls rather than hedging with puts.

Analyst activity has picked up sharply in the last 48 hours, just ahead of the print. Piper Sandler raised its target to $95 from $91, maintaining Overweight. UBS also lifted its target to $89 from $85, holding at Neutral. Both moves came this week, suggesting the Street is marking up expectations rather than taking profits off the table. The mean target across the analyst community is $89, roughly in line with the current price of $85.71, implying modest implied upside. Bears on the Street point to heavy reliance on the US dental market and an exposed competitive position in distribution; the bull case rests on demographic tailwinds in dental, a recovering post-cyberattack operating cadence, and an EPS forward growth factor that ranks in the 94th percentile across the ORTEX universe — comfortably the standout factor score in the data. The valuation is undemanding: the stock trades at 15.1x trailing earnings and 12.1x EV/EBITDA, with both multiples drifting modestly higher over the past month as the share price has firmed.

One institutional detail worth noting: KKR remains the single largest holder at nearly 13.7% of shares, unchanged as of March. FMR (Fidelity) added 1.75 million shares in its most recent disclosed period, a notable addition. Palestra and Southpoint both added meaningfully in Q1, with Southpoint growing its position by 700,000 shares. The direction of active-manager flow has been toward accumulation.

The earnings history over the recent past shows modest day-one reactions: the last two prints moved +1.3% and -2.2% respectively on the day, with the five-day drift slightly positive in both cases. LH and DGX both surged more than 12% on the week — likely driven by their own earnings results — leaving HSIC, flat on the week at $85.71, as a relative laggard among healthcare services peers heading into its own report.

The August 4 print is the clearest near-term focus: with shorts retreating, borrow conditions loose, analysts freshly raising targets, and a 94th-percentile forward EPS growth rank, the setup into earnings is less about whether the bear case is intact and more about whether management can confirm that the operational recovery has translated into numbers that justify the recent target upgrades.