BKH Shorts Build Into Earnings With Street Still Bullish

Black Hills Corporation heads into its Q2 print today with short interest elevated at 12.5% of free float — high for a regulated utility — while the broader lending market remains comfortably loose.

Short interest has risen roughly 9% over the past month, climbing from around 8.6 million shares in late June to 9.5 million now. That is the most notable positioning story heading into the event. Despite the build, borrowing conditions are relaxed: availability runs nearly 8.4x the shares currently short, and cost to borrow has eased to 0.38% from a recent peak above 0.54% in mid-July. In other words, the shorts are accumulating but not being squeezed — this looks more like a considered bearish view than a crowded, disorderly position. Options tell a different story altogether: the put/call ratio of 0.46 is almost perfectly in line with its 20-day average, and the z-score of just 0.06 confirms there is no unusual hedging pressure. The stock itself has slipped 2.8% over the past month to $71.72, underperforming close peers — NWE fell 2.1% on the week while AVA dropped 6.4%, and NI led declines at -4.2%, so sector-wide softness is a real backdrop rather than a BKH-specific story.

The analyst debate is skewed bullish but carries some nuance. B of A Securities upgraded BKH to Buy in June and subsequently raised its target to $87, while BMO Capital maintains an Outperform but trimmed its target modestly to $85 in late July — the only near-term directional pull-back from the Street. The consensus mean target of $85 implies roughly 19% upside from current levels, a wide gap that reflects genuine disagreement about the pace of rate-base growth and regulatory outcomes in BKH's service territories. The forward EPS momentum factor ranks in the 90th percentile across the ORTEX universe, which is the clearest bull anchor: the Street sees earnings power growing. Bears, by contrast, point to quality concerns — negative free cash flow and a modest Piotroski score — and a short score of 62.9 that ranks in only the 6th percentile for short-score rank, flagging the stock as one of the more heavily shorted names relative to its utility peers.

The ORTEX short score has held in a narrow band between 62.4 and 64.0 for the past two weeks, suggesting short sellers are maintaining conviction rather than trimming. Past earnings reactions have been mixed: the most recent print in late July sparked a 3.4% one-day decline that extended to -4.1% over five days, while the two prior events produced modest gains of around 1.8% on the day. Given the elevated short interest level, today's print is less a test of whether BKH can beat estimates and more a test of whether management's commentary on capital spending plans and regulatory recovery can close the credibility gap between a $71 stock price and an $85 analyst consensus.