Edison International Faces Earnings With Analysts Trimming Targets

Edison International, the Southern California utility carrying wildfire liability risk into every quarterly report, releases Q3 results on October 29 against a backdrop of falling short positions, bullish options, and a notable shift in analyst tone that has pulled price targets materially lower.

The options market has turned more optimistic than at any point in the past year. The put/call ratio hit a 52-week low of 0.65 on October 23, almost two standard deviations below its 20-day average of 0.81. That is a sharp reversal from September, when the PCR was running above 1.0, reflecting genuine demand for downside protection. Today the ratio signals that call buyers are dominating, the most bullish options positioning EIX has seen in twelve months. The stock has recovered some ground, gaining 2.5% over the past week to $57.35, ahead of the median 1.3% rise across its closest peers, though it remains down on the month.

Short positioning points the same direction. Short interest has slipped to 4.5% of free float, roughly 17.2 million shares, and is down about 5.4% week-on-week after peaking near 18.2 million shares in mid-October. The borrow market is relaxed: cost to borrow is 0.46%, a level that has been falling for a month, and availability is at 3,215%, an enormous pool of lendable stock relative to current short demand. No squeeze pressure exists here. The ORTEX short score has been drifting lower through October, now at 37.9, consistent with easing bearish conviction.

The analyst community is harder to read, and the recent pattern of target cuts is the most significant development ahead of the print. Over the past month, Barclays slashed its target from $75 to $53, Jefferies downgraded to Underperform with a $42 target, and JP Morgan trimmed to $59. Morgan Stanley, which carries an Underweight rating, raised its target slightly to $62 from $60 on October 21. HSBC initiated coverage on October 22 at Hold with a $56.50 target, just below the current price. The consensus sits at Hold with a mean target of $62.90, implying roughly 10% upside, but the direction of travel has been firmly downward. The bear case centres on unresolved wildfire liability and the cost of California's regulatory environment. The bull case rests on a P/E of under 9x and an earnings yield in the 90th percentile of the universe, alongside a dividend score that also ranks in the 90th percentile, making the stock attractive to income investors if liabilities can be bounded.

The most recent earnings event, in late July, delivered a stark reminder of the downside risk. The stock fell 6.7% on the day and 14.5% over the following five days. The print before that produced a smaller 1-day move but a similar five-day decline of 10%. That pattern of post-earnings drift lower will be the context investors apply to whatever number arrives on October 29. The print will test whether the company can offer any clarity on wildfire exposure, and whether that clarity is enough to justify the optimism now evident in both the options market and the easing short book.