Woodward Analysts Trim Targets as Earnings Loom

WWD enters its November 23 earnings with analysts recalibrating after July's sharp selloff, options traders now tilting toward calls, and the borrow market offering no signal whatsoever.

The clearest story this week is what happened in the options market over the past fortnight. The put/call ratio has collapsed from near its 52-week high above 1.93 in early October to 0.73 today, well below the 20-day average of 1.13. That shift is roughly 0.76 standard deviations below the mean, placing current positioning in distinctly bullish territory relative to recent norms. Whatever drove the heavy put activity in the first week of October has faded, and the options market is now leaning more toward upside than at any point in the past month.

The borrow market is emphatically not the story here. Short interest runs at just 1.8% of the free float, essentially unchanged over the past week, and availability is so ample it is nearly uncapped, roughly 58 million shares available against around 1.07 million borrowed. Cost to borrow has crept up 7% on the week to 0.41%, but that number remains negligible in absolute terms. The ORTEX short score of 29.6 places WWD at the 75th percentile for low short pressure. There is no meaningful bearish positioning to speak of in the lending market.

The Street is more cautious than the lending data implies. Several firms cut price targets in late September and early October, mostly maintaining their ratings while trimming numbers. TD Cowen lowered its target to $380 from $420 on October 9, keeping a Hold, while Jefferies trimmed to $420 from $450 and Wells Fargo edged down to $430 from $440, both keeping positive ratings. The mean target now sits at $425, against a current price of $324, implying roughly 31% upside on paper. That spread looks wide, but some of these targets were set before July's 13% single-day drop on earnings. Guggenheim launched coverage in September with a Buy and a $404 target, which at least anchors a post-selloff floor for the constructive case. EPS momentum ranks at the 97th percentile over 30 days and 90th over 90 days, which is the strongest part of the factor profile. Valuation is the tension point: the PE multiple stands near 26x and has compressed about 5 points over the past 30 days, while EV/EBITDA has eased to 17.1x from around 20x, partly on price action and partly on improving earnings estimates.

The bull and bear cases are well-defined. Bulls point to the breadth of end-market exposure: commercial aerospace OEM, aftermarket, defense, and data-centre power generation. Third-quarter sales rose 21% year-on-year and adjusted EPS grew 43%, with aerospace margins guided at 23.5% for full-year 2026. Bears focus on customer concentration, with roughly 36% of revenue tied to five customers including Boeing and Airbus, and on a CapEx cycle that is set to roughly double year-on-year, with the Spartanburg facility not operational until 2027. Free cash flow is under pressure precisely when the cycle is peaking, and any build-rate disruption from the top OEM customers would hit revenue and potentially trigger contractual exposure at the same time.

Institutional ownership gives a broadly supportive read. BlackRock added roughly 701,000 shares in the quarter ending September 30, lifting its stake to 11.9%. FMR added around 602,000 shares in the same period, bringing its position to 4.7%. T. Rowe Price made the largest proportional addition, adding around 1.48 million shares to reach 2.8% of outstanding shares. The insider register is less instructive: the October 3 transactions by the CEO and COO were tax-withholding sales coded as type "F", which are compensation mechanics rather than discretionary selling.

The July earnings print is worth holding in mind. WWD fell 13.2% on the day and lost a further 9.1% over the following five trading sessions after its most recent result. With the next report set for November 23, 33 days away, and the options market currently positioned more toward calls than at any point since September, the question over the coming weeks is whether that constructive drift in options pricing holds as the print approaches or reverses as it did in early October.