Cummins ends September with short sellers adding exposure at the fastest monthly pace in the dataset, while analysts keep cutting targets on a stock that has lost 8% over the past month.
The short-selling rebuild that was "quiet" a week ago has become harder to ignore. Short interest in CMI has climbed 15% over the past week and 41% over the past month, reaching 2.9% of the free float as of September 29. That is still a low absolute level, but the velocity matters: shares short have risen from roughly 2.3 million at the start of September to just over 4 million now, a near-doubling in four weeks. Borrow costs ticked up 26% on the week to 0.44%, still cheap in absolute terms. Availability remains extremely loose, with well over 100 million shares available to borrow against roughly 4 million shorted, so there is no mechanical squeeze pressure here. The lend market is barely registering the build. What the data does signal is a deliberate, sustained decision by a growing number of participants to position against the stock.
The options market tells a different story from the short book. Call interest has been rising relative to puts, with the put/call ratio at 0.89, more than one standard deviation below its 20-day average of 0.98. Looking back through September, the PCR was running consistently above 1.0 through early September, meaning the market was more defensively positioned then than it is now. That shift toward calls suggests at least part of the market is positioning for a recovery rather than further downside, a direct contrast to the short-side accumulation.
Analyst pressure continued into the final day of the quarter. UBS analyst Steven Fisher cut his price target to $741 from $835 this morning, maintaining a Buy rating. That follows JP Morgan's Tami Zakaria lowering her target to $600 from $690 last week, also keeping a Neutral. Evercore ISI trimmed to $782 in August. The pattern is consistent: every recent move has been a target reduction, none an upgrade, and none accompanied by a rating cut. The consensus mean target is $741, implying roughly 42% upside from the $521 close on September 29. The gap between Street targets and market price is wide. The PE multiple has compressed by roughly 1.5 turns over the past 30 days, now at 15.6x, while the PB ratio has dropped by about 0.44 turns. The forward earnings growth factor ranks in the 89th percentile of the universe, and the dividend score ranks in the 98th, two metrics that form the core of the bull case. Bears cite the 120 basis point gross margin compression year-on-year, weaker North American truck volumes, and declining China demand for heavy-duty engines.
Insider activity adds a minor note. The only open-market transaction in the past 90 days was a VP-level sale of 698 shares at $572 in late August, worth roughly $399,000. That is not a signal of conviction in either direction at the senior level. The top holders, BlackRock and Vanguard entities between them controlling over 20% of shares, have each made small incremental additions in recent filings. No activist 13D is on the register.
Peer performance this week provides useful context. CAT rose 2.3% on the week while NPO gained 2.3% and TKR added 1.5%. CMI fell just under 1%, a relative underperformer against most of its closest correlated industrials. TEX was the outlier in the other direction, falling 9.2% on the week, while SPXC also dropped 2.3%. CMI's underperformance is modest but sits alongside the short-interest build and the analyst target cuts as part of the same cautious picture.
The next earnings print is scheduled for November 4. With short interest building steadily, options positioning shifting toward calls, analyst targets drifting lower but ratings holding, and the stock trading at a 42% discount to consensus targets, the key question into that print is whether the Street's confidence in the power generation demand story survives another quarter of margin data.
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