UTHR: Bulls Buy Calls, Retail Piles In, Shorts Stay Put

Why this matters: Eight days before earnings, United Therapeutics is drawing attention from every direction at once. Options traders are buying calls at the fastest pace in months. Retail attention has spiked to nearly 5 standard deviations above its 90-day norm. Shorts built a large position over the past two weeks and have now stopped adding. The signals are pointing in opposite directions, and earnings on October 28 is the pin.

Converging Signals

The options market is the sharpest read right now. The put/call ratio dropped to 0.52 on October 19, against a 20-day mean of 0.86. That is 3.3 standard deviations below the mean. The 52-week low on the PCR is 0.0, so there is room to go further, but at current levels call buyers are decisively in control of the options book. This is the most bullish options positioning UTHR has seen in months.

Retail is moving the same way. Wikipedia page views and ORTEX stock page traffic combined to push the retail attention signal 4.7 standard deviations above its 90-day average as of October 19. That is attention, not a revenue indicator, but a reading this elevated in the week before earnings typically means the event is on a lot of screens.

Short interest tells a different story, or at least a more complicated one. Shares short stand at 8.5% of the free float, up 34% over the past week and up 55% over the past month. The big move came around October 7 to 8, when estimated short shares jumped from roughly 2.7 million to 3.6 million in a single session. Since then, shorts have held roughly steady. The borrow market has not tightened: availability sits at 2,920%, meaning there are roughly 29 shares available for every one already lent out. Cost to borrow is 0.34%, barely above zero. Whoever built this short position paid almost nothing to do it, and they have plenty of company in the pool if they want to add more.

Corroborating Context

The analyst backdrop favours the bulls on balance. Leerink Partners raised its target to $725 on October 19, maintaining Outperform. RBC Capital raised to $708 on October 8. BTIG upgraded to Buy with a $728 target on October 1. The consensus mean target of $659 sits roughly 21% above the current price of $543. Goldman Sachs, which initiated with a Sell and a $321 target in September, remains the most prominent dissenter and is the data point the short sellers can point to.

EPS momentum is a factor worth noting. The 30-day EPS momentum percentile rank stands at 94, among the strongest readings in the sector. That is corroborating colour for the call buyers but does not settle what the print will show.

Medicaid data from the Centers for Medicare and Medicaid Services adds a cautionary note. Medicaid prescriptions for the company's drugs have fallen for three consecutive quarters, with the most recent quarter showing 5,208 prescriptions. Medicaid dollars reimbursed were down 11% on the same quarter last year. None of the alt data datasets have been measured to lead United Therapeutics' reported revenue, so this cannot be read as a forecast of the print. It is, however, the direction the government reimbursement channel has been running.

Data Summary

• Short interest: 8.5% of free float, up 34% in one week, up 55% in one month
• Borrow availability: 2,920%, no meaningful tightening
• Put/call ratio: 0.52, minus 3.3 standard deviations versus 20-day mean
• Retail attention z-score: 4.69 standard deviations above 90-day average (as of October 19)
• Consensus price target: $659, with Leerink at $725 and Goldman at $321
• EPS momentum 30-day percentile: 94
• Earnings: October 28