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AT&T enters its October 21 earnings with a notable tension: borrowing costs have spiked sharply this week even as options traders remain more bullish than usual and analyst targets continue to drift higher.
The most striking data point in the lending market is the cost to borrow, which has nearly doubled over the past week to 0.42%, up 85% from 0.23% seven days ago. That said, the absolute level remains very low, and availability is effectively unconstrained, with over four billion shares available to borrow. Short interest is just 1.8% of the free float, roughly 126 million shares, down about 2% on the week after a brief uptick on Monday. The CTB spike is worth noting before earnings, but it does not signal any meaningful squeeze pressure. The lending picture for AT&T remains one of the most relaxed in the market, consistent with the previous note's conclusion that this is not a stock where borrow dynamics drive the story.
Options positioning tells a more constructive story. The put/call ratio has edged back down to 0.66, still below the 20-day mean of 0.70 and roughly 0.8 standard deviations below it. That is a mild but persistent call-side tilt. Compared to where the ratio stood in mid-September, around 0.77, the shift towards calls over the past three weeks has been gradual and consistent, and it has held through the stock's 5% pullback over the past month. The 52-week low on the PCR is 0.49, so the market is not positioned aggressively, but the lean is clearly away from downside protection as the earnings date approaches.
Analyst sentiment has been mixed in the two weeks since the last note. Scotiabank trimmed its target from $29.25 to $27.50 on October 2, maintaining a Sector Perform rating. That offsets some of the optimism from Morgan Stanley, which raised its target from $27 to $28 on September 28 while keeping its Overweight, and from BNP Paribas, which upgraded to Outperform with a $30 target on September 21. The mean analyst target is $28.46, implying roughly 16% upside to the current price of $24.43. AT&T ranks in the 93rd percentile on analyst recommendation divergence, meaning the gap between the most bullish and most bearish views is unusually wide for a stock of this size. The bull case centres on free cash flow from 74 million postpaid customers and the DirecTV stake disposal supporting capital returns. The bear case focuses on ARPU pressure in wireless and a legacy segment that faces an increasingly difficult EBITDA path beyond 2027, with the payout ratio expected to remain above 100% into at least 2028.
The stock is down 4.9% over the past month and up just 0.8% on the day to $24.43. Close peer VZ was essentially flat on the week. The ORTEX short score sits at 31.3, a level that has been remarkably stable for the past two weeks and remains well below any threshold that would suggest short-side conviction is building. Factor scores paint a broadly neutral picture: the EPS surprise rank of 74 reflects a company that has been clearing the bar consistently, and the dividend score of 61 is respectable, though the dividend history data in this snapshot is stale and should not be taken as a current yield reference.
The last two earnings prints are worth framing. After Q2 2026 results in July, the stock gained 3.1% on the day and 7.5% over the five sessions that followed. After the prior quarter's print in May, it fell 2.9% on the day before recovering over the following week. With results now 14 days away, the degree to which wireless service revenue growth and free cash flow guidance hold up against ARPU headwinds will likely determine whether the pattern of post-earnings recoveries continues.
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