BMI Shorts Surge 20% Ahead of Thursday Print

Badger Meter heads into its October 16 earnings release with short sellers at their most aggressive in months, even as the stock has staged a quiet recovery.

The sharpest signal heading into Thursday's print is short interest itself. At nearly 16% of the free float, short positioning has climbed 20% in a single week, the fastest build seen in the available daily history. The short score of 76.9 sits near the top of its recent range, ranking in the first percentile of ORTEX's universe on both short interest and days-to-cover. Yet the borrow market does not show distress. Borrowing costs remain negligible at around 0.52%, and availability is relatively comfortable at 145%, meaning there is still well over one share available to borrow for every share currently shorted. That combination, heavy positioning but easy, cheap access to borrows, points to a deliberate pre-earnings bet rather than a squeezed or disorderly short book.

Options tell a different story, one that is actually less pessimistic than the short-interest data implies. The put/call ratio eased to 1.18 on Tuesday, nearly half a standard deviation below its 20-day average of 1.27. Earlier in October, the PCR ran closer to 1.58, so the recent drift lower suggests options traders have been quietly reducing their downside hedges even as share-lending shorts built. Meanwhile the stock itself has recovered 6% over the past week to $131.25, adding to a 5% gain over the past month, a rebound that cuts against the short-side thesis if it holds through Thursday.

The bull-versus-bear divide on Badger Meter centres on one question: whether the company's 2H26 recovery story is real or aspirational. Bulls point to a backlog of nine AMI projects totalling roughly three million meter connections, the start of PRASA shipments, and a software attachment rate of 100% via BEACON that supports margin expansion over time. Bears counter that the business has now posted two consecutive quarters of organic revenue declines, with 1Q26 down 9% year over year and 2Q26 still about 7.5% lower, as large AMI projects sunset and short-cycle orders soften. On valuation, the stock trades at around 27x trailing earnings with EV/EBITDA near 16x, leaving limited room for another miss. Barclays, the only firm to act ahead of this print, trimmed its target slightly to $111 while maintaining its Underweight rating. The broader consensus sits considerably higher, with a mean target near $156, implying meaningful upside if the recovery narrative gains traction.

Ownership context adds one noteworthy wrinkle. BlackRock holds 16.9% of shares as of September 30 and added modestly in the quarter. State Street added more than 126,000 shares in the same period, taking its stake to 5.7%. Passive accumulation of that scale alongside a 20% short-interest build in the same window creates a real tug-of-war in the register. The last earnings print, in July, ended with the stock falling more than 15% in a single session before stabilising about 8% below the pre-announcement level over five days. Thursday's report is effectively a test of whether management's 2H26 organic growth target of approximately 8% year over year has begun to materialise, or whether the sequential softness that defined the first half is still running.