CWST Bears Dig In, but Borrow Market Stays Relaxed

Casella Waste Systems heads into its Q2 print today with short interest continuing to build — yet the lending market and options positioning offer little sign of real alarm.

Short sellers have grown more committed over the past month. Short interest has climbed roughly 7.5% over 30 days to reach nearly 8% of the free float — a level that is material for a mid-cap waste hauler and one that has been trending in one direction. Since the previous earnings preview published on July 29, short interest has added another 3.7% on the week, continuing the grind higher. The borrow market, however, tells a calmer story. Availability is running at around 196% of outstanding short interest — ample by any standard — and cost to borrow has actually eased, falling about 7% over the past month to just 0.53%. That combination points to short sellers building positions at low cost, without any squeeze pressure accumulating in the background.

Options traders are not particularly worried either. The put/call ratio has edged up to 0.64, fractionally above its 20-day average of 0.63 — barely half a standard deviation away, and well below the defensive readings above 0.90 seen in late June. That's a notable contrast with the short interest trend: bears are adding to positions, but the options market is not hedging into the print with any urgency. The stock itself closed at $90.46, up less than half a percent on the day and about 1% higher on the week, though it has given back 6% over the past month — underperforming large-cap peers like WM and RSG, both of which fell 5% on the week against CWST's relative stability.

The analyst picture skews constructive but has softened. UBS trimmed its target from $130 to $122 in late June, maintaining its Buy rating. That follows a broader pattern of downward target revisions from UBS and JP Morgan since the start of the year, even as Barclays upgraded to Overweight in May. The consensus mean target of $111.40 sits roughly 23% above the current price — a gap that reflects genuine disagreement about timing rather than direction. Bulls point to CWST's diversified regional model and strong forward EPS momentum, which ranks in the 93rd percentile. Bears counter with New England economic exposure, commodity price risk in recycling, and a PE above 65x that leaves little margin for error. The ORTEX short score has crept up to 63.6 — near a recent high — consistent with the slow accumulation of short positions over the past several weeks.

Today's print is therefore a test of whether the company's revenue model can justify a premium multiple against a backdrop where insiders — including the President and CEO — were net sellers in the spring, and where the street has been quietly trimming its expectations without abandoning its broadly positive view.