AEP Shorts Retreat After Earnings, Stock Holds Near Monthly High

American Electric Power has seen its short position shrink over the past week, even as the stock climbed to its best levels in a month, a combination that left bears caught on the wrong side of a 10% October rally.

Short sellers pulled back noticeably into and after the Q3 print. The short position now stands at 26.8 million shares, 5.0% of the free float, down 8.3% over the past week. That is a meaningful retreat from the mid-October peak of nearly 29.6 million shares. The daily reading on October 27 ticked up 1.8% from the prior session, so the unwind has not been entirely smooth, but the weekly direction is clear. The borrow market adds little drama. Cost to borrow is 0.38%, up 7% on the week but down 10% over the month, firmly in low territory. Availability is running at 962%, meaning roughly nine and a half shares remain available to lend for every one currently borrowed. There is no tightness in the lending pool.

Options positioning has stayed tilted toward calls, consistent with the rotation documented in earlier notes this week. The put/call ratio is 0.55, nearly one standard deviation below its 20-day average of 0.63 and close to the lower end of the past year's range. That is a notable shift from the readings above 0.80 that prevailed through late September. The ORTEX short score has also eased, dropping from near 49.5 a week ago to 47.8, reflecting the lighter short positioning. The score ranks in the 21st percentile for short conviction across the market, consistent with a stock where bears are present but not pressing.

The Street is broadly constructive, though not uniformly so. HSBC launched coverage on October 22 with a Buy and a $145.90 target. Jefferies maintained its Buy the same day, trimming to $146 from $148. Morgan Stanley lifted its target to $130 from $128 earlier in the week, keeping Overweight. JP Morgan and BMO both held neutral-leaning ratings and trimmed targets to $135. The consensus mean target is $141.50, roughly 9% above the current price of $130.30. The analyst recommendation divergence factor score ranks in the 99th percentile, an unusually wide spread between the most bullish and most bearish views on the Street. The bull case centres on 24GW of secured new load through 2030, heavily weighted toward data centre demand, and a $70 billion capital plan. Bears point to a funds-from-operations to debt ratio of 13.2%, below the company's own 14% to 15% target range, and ongoing coal exposure. The price-to-earnings multiple has expanded by about 1.6 points over the past month to 19.2x, and price-to-book has risen 0.17 points to 1.97x, reflecting the stock's strong October performance.

The share price closed at $130.30 on October 27, up 2.4% on the week. Closest peers posted a median gain of around 2.9% over the same period, with ETR rising 3.1% and PNW up 3.3%, so AEP modestly lagged the utility group even as it held near its monthly high. The one-month gain of 10% is the more striking figure, driven by the build-up into earnings rather than the print itself. The Q3 release on October 30 is the next scheduled data point, and how management frames the load growth pipeline and capital spending pace will be the focus of any follow-up positioning moves.