RRX Options Turn Bullish as Shorts Retreat Before Thursday's Print

Regal Rexnord reports Q3 results on Thursday with options positioning making a sharp break from the defensive posture that defined much of the past two months.

The put/call ratio has fallen to 0.87, more than two standard deviations below its 20-day average of 1.01. That gap is the most pronounced tilt toward calls in the past year: the ratio spent most of September and early October above 1.0, with puts consistently dominating. The reversal in the final week before the print is the clearest positioning signal in the data. It runs against the stock's recent price action, which is down 4.5% over the past week, roughly in line with peers. ETN fell 5.0% and GEV dropped 5.9% over the same period, so the pullback looks more like sector rotation than stock-specific pressure. The stock closed Monday at $150.48, up 1.7% on the day.

Short interest reinforces the less crowded picture. At 4.8% of free float, the short position has been declining steadily: down nearly 4% over the past week and off more than 6% from the late-September peak of around 3.85 million shares. Borrow costs are negligible at 0.43%, and availability is wide open at 3,644%, meaning for every share currently borrowed there are roughly 36 available. There is no squeeze dynamic, no borrow tightness, and no indication the short community is adding ahead of the print.

The analyst community has broadly kept its positive ratings intact but has been cutting price targets sharply. JP Morgan trimmed its target from $240 to $196, and Citigroup moved from $220 to $200, both in the week of October 6 to 12. Oppenheimer cut from $245 to $200 in the same window. None changed their rating. The mean target now sits at $231, implying roughly 54% upside from the current price, a gap that reflects how far the stock has fallen from mid-year levels rather than genuine near-term conviction. The debate is less about direction and more about timing: the bull case rests on data-center demand lifting the AMC segment, with around $735 million of ePOD orders and roughly $180 million of 2026 sales already visible, plus deleveraging toward below 2.0x net leverage by end of 2027. The bear case centres on the August earnings shock, when management cut its second-half margin outlook across all three segments, citing tariff pressure, integration delays, and price-cost deterioration. The stock fell 18.6% on that day and dropped a further 3% over the following week, the most severe single-session reaction in the recent history.

Viking Global Investors is the most notable ownership development. The fund held 3.58 million shares as last reported on September 9, adding roughly 1.48 million shares in that filing period, a position that now represents about 5.4% of the class. BlackRock and FMR LLC are the two largest holders, though both have been trimming since their respective peak filings. All 13D/G positions are as last disclosed around the 5% threshold; holders who drift below that level are not required to file again.

Thursday's print tests whether the August margin guidance cut was a low-water mark or the start of a downward reset, and whether data-center order momentum can offset the continued softness in residential HVAC and IPS.