Edison International clawed back 8.9% on September 1 to close at $58.80 — a relief rally after one of the most violent single-session collapses in the stock's modern history, yet one that leaves it still down 21% on the week and 20% over the past month.
The analyst community moved fast after the wildfire legislation shock. BofA Securities downgraded to Neutral and slashed its target from $81 to $51 — the most aggressive cut in the group. Mizuho followed with a downgrade from Outperform to Neutral and cut its target from $86 to $70. UBS maintained Neutral but trimmed to $63 from $75. The direction of travel is unambiguous: the Street has been repricing the wildfire liability story in real time, and the consensus has shifted decisively toward caution. The mean target now rests at $69.21 against a $58.80 close — implied upside of roughly 18% — but that figure is a lagging average still anchored by targets set before the legislative blow. Ratings stand at 3 buys and 11 holds, with Morgan Stanley maintaining its Underweight and trimming to $65. This is not a group with conviction in a quick recovery.
The positioning picture is one of irony. Short sellers had already been covering for weeks before the event struck. Short interest fell from a mid-July peak above 15.7 million shares to roughly 13.5 million — 3.5% of the free float — by September 1. The covering accelerated through August: shorts are down more than 13% across the past month. Borrow conditions remain entirely unconstraining. Availability is running at 2,526% — meaning roughly 278 million shares sit ready to lend against the ~13.5 million currently borrowed. The cost to borrow is just 0.43%, easing about 11% on the week. This is the lending market of a stock that is not heavily contested by short sellers. What it also means is that the August 31 crash was not a squeeze — it was genuine selling pressure from holders, not a technical unwind. The ORTEX short score has drifted lower across the past two weeks, from 41.1 on August 19 to 37.4 now, which ranks in the 39th percentile. Bears are not piling in; they had already largely stepped back before the news hit.
Options tell a different story. Protective demand has been elevated all week. The put/call ratio reached 1.49 on August 31 — near the 52-week high of 1.50 — before easing to 1.31 on September 1. Even at Tuesday's reading, puts outnumber calls at a rate well above the 20-day average of 1.30. The z-score has pulled back to near zero, but the broader context is clear: options traders spent the prior week loading up on downside protection, likely ahead of the legislative outcome. Those hedges paid off. The question now is whether the elevated put/call ratio persists or normalises as holders reassess the new liability landscape.
The earnings history adds important context. At the July 30 Q2 print — filed after EIX had guided for 5-7% core EPS growth — the stock fell 6.7% the next day and 14.5% across the following five sessions. That reaction preceded the wildfire bill and reflected growing unease about the legislative path. The Q4 result showed a near-zero one-day move but a 10% five-day decline. The pattern is one of delayed punishment rather than sharp snap-back after prints. The next earnings event is pencilled for October 30, and the legislative overhang will be the dominant framing for that release.
Peer performance underscores how idiosyncratic this event was. Close peer PCG — Pacific Gas & Electric, which carries its own California wildfire exposure — fell 23.4% on the week alongside EIX, then bounced 6.0% on September 1, mirroring EIX's relief move almost exactly. The rest of the utility group, by contrast, barely moved: OGE was flat on the week, ES down less than 1%, and XEL off 1.7%. The California wildfire liability trade is concentrated in EIX and PCG, not spread across the sector.
What to watch next is whether the remaining buy-side holders — BlackRock at 11.7%, State Street at 9.4%, Vanguard entities collectively above 13% — begin trimming in response to the revised liability framework, and how the October 30 earnings call addresses the company's cost-of-capital outlook after Sacramento's decision.
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