SPXC heads into earnings with Street still bullish despite target cuts

The bull case rests on HVAC growth that looks durable on paper. First-quarter sales rose 17.4% to $567 million, adjusted operating income climbed 21.6%, and EBITDA margins expanded to 22.2% despite tariff pressure. The data centre revenue line is guided to grow roughly 70% in 2026, a number that carries a lot of weight in the valuation. The company's Detection and Measurement segment adds diversification, with a $333 million backlog and 27% operating margins. Bears counter that the stock is heavily exposed to US commercial construction, that petroleum, steel and copper cost inflation could outpace pricing actions, and that the backlog showed a modest sequential decline. The EV/EBITDA multiple has compressed to about 12.3 times over the past 30 days, down from roughly 12.75 a month ago, and the price-to-earnings ratio sits near 18.7. Those are not stretched multiples for a company growing this fast, but they are also not so cheap that the risk is fully priced.

Short interest is not a meaningful angle here. Bears hold roughly 3% of the free float, a position that has edged down about 1.6% on the week and sits in the middle of the range for the past six weeks. Borrow costs at 0.41% are low, and availability is extraordinarily loose at more than 7,000%, meaning there are far more shares available to borrow than are currently short. There is no squeeze pressure and no unusual short-selling activity. The ORTEX short score of 33.8 is consistent with a stock where bearish positioning is modest and stable. Options positioning has also eased from a defensive posture: the put/call ratio at 1.31 is below its 20-day average of 1.46, suggesting hedging demand has pulled back compared with the elevated levels seen through late September.

The one genuinely interesting signal in the ownership data is the divergence in the institutional register. Capital Research holds 9.8% and added 590,000 shares in the most recent reported period. Janus Henderson added more than 1.1 million shares to reach 3.8% of shares outstanding. BlackRock, meanwhile, filed a 13G/A in late July disclosing its stake had fallen from 11.5% to 8.9%, a reduction of nearly 2.6 percentage points. The two directions of travel, active managers adding while BlackRock trims, point to a stock where the active community sees a rerating opportunity that passive flows have not yet confirmed. No 13D activist is on the register.

Earnings history adds another layer of context worth tracking. The most recent quarterly report, in late July, produced a 17% one-day gain and a further 14% gain over the following five days. That is a significant post-earnings move for a mid-sized industrial, and it was driven by results that beat on growth and margins. The next print on October 29 arrives with the stock sitting roughly 13% below where it was before that July release, meaning the bar for a comparable reaction may be lower. With retail attention running above its own 90-day history (a Wikipedia views z-score of 1.78 as of late September), there is at least some evidence that broader interest in the name is picking up ahead of the event.

What to watch on October 29: whether management updates the data centre revenue growth guidance, and whether the HVAC backlog has stabilised or declined further, since those two numbers together will determine whether the Street's current target assumptions hold or face another round of cuts.