WES Options Turn Bullish as Analysts Pull Back Targets

Western Midstream Partners enters the week with an unusual split in its market signals: options traders are the most call-heavy they have been in months, even as two major Wall Street firms trimmed their price targets this week.

The clearest divergence is in the options market. The put/call ratio has dropped to 0.49, more than two standard deviations below its 20-day average of 0.57. That makes this the most call-skewed reading WES has seen in at least a year, with the 52-week low sitting at 0.25. Investors are adding call exposure at a pace that stands out even against the partnership's already call-tilted recent history. The stock closed at $44.53 on Tuesday, down 1.7% on the week and off 5.8% over the past month, so the call buying is not a momentum trade riding a rally.

Short positioning is a secondary factor here. Short interest amounts to 1.4% of the free float, about 5.7 million shares, and has fallen 14% over the past month. That is a low and declining level that puts no meaningful squeeze pressure on the stock. The borrow market reflects the same looseness: availability runs at roughly 1,565%, meaning there are far more shares available to lend than there are shares already borrowed. Cost to borrow ticked up 26% on the week to 0.42%, but remains firmly in routine territory. Nothing in the lending market points to any unusual demand for short exposure.

The analyst picture is more cautious. Morgan Stanley cut its target to $52 from $55 this week, maintaining an Equal-Weight rating. JP Morgan simultaneously assumed coverage with a Neutral rating and a $50 target. Both moves trim the Street's collective view without abandoning it. The mean analyst target sits at $49.46, about 11% above the current price. Truist and Stifel both initiated with Buy ratings and $55 targets in September, giving the bull camp some heft. The EV/EBITDA multiple is running near 8.8x, and the forward earnings yield factor ranks in the 91st percentile on a 12-month basis, a signal the partnership's cash generation profile is well regarded relative to its peers. The dividend factor score of 99 reflects the partnership's standing as one of the highest-yielding names in the midstream space, though the dividend history in the data runs only through 2022 and should be verified independently.

Occidental Petroleum remains the dominant presence in the ownership register. It holds 38.3% of WES units on a Schedule 13D/A filing, down from 40.6% at the prior filing in February, and is classified as an activist holder on ORTEX's 13D register. ALPS Advisors holds a further 9% on a passive 13G. The Occidental stake means roughly half the partnership's outstanding units sit with two holders, a concentration that shapes how the float trades. As always with 13D/G positions, stakes are as last disclosed around the 5% threshold and a holder dropping below that level may not file again.

On the week, WES fell 1.7% while close peer ET dropped 4.5% and AM lost 2.4%. EPD and PAA managed gains of 2.6% and 2.3% respectively, suggesting the midstream complex is not moving in one direction. The next earnings event is scheduled for 4 November, and the most recent print in August produced a 1% gain on the day and a 4.6% gain over the following week.

The call-heavy options positioning against a backdrop of analyst target cuts and a softening unit price is the data point worth tracking into the November earnings date.