WM Reports Tuesday With Short Interest at a Year High

Waste Management reports Q3 results on Tuesday, October 27, with short interest at its highest level in over a year and analysts cutting targets ahead of the print.

Short interest has nearly doubled since late September, climbing from around 5.4 million shares to just under 7.9 million, equivalent to 1.96% of free float. That is the largest short position the stock has carried in at least twelve months. The build is real, but the lending market shows no sign of stress. Availability is essentially uncapped, with shares available to borrow running at multiples of the amount currently lent out, and borrowing costs have fallen 35% over the past week to 0.32%. Options positioning reinforces the picture: the put/call ratio at 0.54 is below its 20-day average of 0.60, sitting more than one standard deviation on the bullish side of normal. Taken together, the short build looks like a tactical hedge ahead of results rather than a conviction bear trade.

The analyst community has turned cautious over the past few weeks. Morgan Stanley lowered its target to $220 from $230 on October 13, maintaining Equal-Weight. JP Morgan cut from $270 to $235 on October 8, keeping Overweight. CIBC trimmed to $225 from $250 on the same day. All three moves point in the same direction: the Street still broadly holds positive ratings, but it is marking down expectations. The mean price target now stands at $253.52, roughly 6% above the current price of $239.38. The PE multiple has expanded about 3.4 points over the past 30 days as the stock rallied 15%, leaving valuation less comfortable than it was a month ago. WM ranks in the 71st percentile for earnings surprise across the ORTEX universe and scores a 98 on dividend, but momentum on forward earnings estimates is softer, with the 90-day EPS momentum factor at the 35th percentile.

The bear case heading into Tuesday centres on sales growth below 5% in the first half of the year, declining recycled commodity prices creating a roughly $14 million EBITDA headwind, and margin expansion that analysts argue is being driven more by reclassification and sustainability accounting than by operational gains. The bull case is anchored to the planned return of roughly 90% of targeted $3.8 billion in FY26 free cash flow to shareholders, a 162% year-on-year increase, alongside pricing gains from the SRCL integration.

WM gained 5.5% on the week, broadly in line with the peer group's median. RSG added 3.8% and CTAS 4.9%. The bigger movers were WCN and CWST, up 11.1% and 10.9% respectively, suggesting some capital rotated more aggressively into those names. WM's recent earnings history adds context worth noting: the last three reported quarters each produced a negative one-day reaction, including a drop of 5.5% after the most recent print in late July. The five-day drift after each of those events was also negative, ranging from roughly 4.5% to 6.3% lower.

The number to watch Tuesday is whether management reaffirms the FY26 free cash flow target and whether the SRCL integration is showing through in pricing, two factors the recent analyst target cuts suggest the Street is not yet willing to take on faith.