PMT shorts pile in as earnings loom

The Street has been in retreat on PMT for most of 2026, and the gap between consensus targets and the current price tells its own story. The stock closed at $7.90 on October 7, down 18% over the past month. The mean analyst price target is $11.11, implying roughly 40% upside from current levels, but the trajectory of those targets has been steadily downward. Since last earnings in late July, Wells Fargo cut its target to $10 from $12, Piper Sandler trimmed to $10 from $11.50, and UBS dropped to $10 from $11.25, all maintaining neutral or equal-weight ratings rather than stepping away entirely. Deutsche Bank was the outlier, upgrading to Buy in August at a $12 target, though that move now looks ambitious given the stock has fallen further since. Keefe, Bruyette & Woods downgraded to Market Perform back in May. The overall posture is a cluster of neutrals sitting on declining targets, not a bullish setup.

The factor scores sharpen the picture. PMT scores in the 4th percentile for short score rank and the 6th for days-to-cover rank, both deep in the bearish zone. The dividend score is in the 95th percentile, which reflects the income appeal of the trust structure, though the dividend data in the snapshot is stale, with the last confirmed dividend dating back to mid-2022. On valuation, the price-to-book multiple has dropped 11% over the past 30 days to 0.54, and the PE has contracted by roughly 1.4 turns to 6.1 over the same period. Bulls can point to a stock trading at half book value with a projected return on equity of nearly 10% and strong correspondent mortgage volumes. Bears note the book value erosion, the decline in servicing unpaid principal balance from $224.6 billion to $221.6 billion, and a quality factor score that has flagged deteriorating fundamentals for several months.

The closest peers give additional context. MFA Financial fell 8.9% on the week. Chimera Investment dropped 6.0%. AGNC Investment lost 6.7%. PMT's 0.25% weekly gain is therefore a relative outperformance, though the monthly picture at minus 18% tells a grimmer story. The sector is clearly under pressure, and PMT's short interest build is running faster than the sector-wide weakness alone would justify.

With three weeks until the October 29 print, the key question is whether the short build is positioning around a feared book value miss or a dividend cut, or both. The previous earnings on July 29 produced a 4.9% one-day drop and a 3.5% five-day decline. Whether this quarter's setup, with short interest now materially higher and the stock 18% lower on the month, produces a different outcome is what to watch.