TARS Short Interest Eases, But Bears Hold Ground Before Q3 Print

Tarsus Pharmaceuticals carries a relatively light short position compared with several of its closest Nasdaq peers heading into Thursday's earnings release. Short interest at 13.9% of free float is meaningful, but ARVN and HRMY both declined sharply last week (down 4.8% and 2.5% respectively), while TARS gained 2.7%, suggesting the stock is not trading in lockstep with the broader specialty biopharma tape right now.

The short position itself has been shrinking. Shares short fell roughly 3% over the past month to around 5.9 million, pulling back from levels above 6.1 million seen in mid-October. Despite that retreat, short interest remains elevated enough to matter: at 5.7 days to cover per FINRA's fortnightly settlement data, an adverse print would take time to unwind. Borrowing costs have ticked higher, up 29% over the past week to 0.50%, though the absolute level remains low. Availability is exceptionally loose at 1,358%, meaning the lending pool holds roughly 14 shares available for every one currently borrowed, so there is no structural squeeze threat from the borrow market.

The options market tells a different story from the shorts. The put/call ratio of 0.74 sits about one standard deviation below its 20-day average of 0.87, meaning call volume is running above the recent norm relative to puts. That is an unusually constructive posture for an earnings week, and it has persisted for about two weeks since mid-October, when the PCR was running above 1.0.

The debate among analysts centres squarely on XDEMVY's commercial trajectory. The bull case rests on management's 2026 guidance of $670 million to $700 million in net product sales, implying over 50% year-on-year growth, supported by a direct-to-consumer campaign and planned additions to the sales force. The recently acquired iRenix pipeline adds a second platform. Goldman Sachs reinstated coverage in late September with a Buy and a $116 target; Barclays followed shortly after with Overweight and a $110 target. The consensus mean sits at $98.89 against a current price of $72.64, leaving implied upside of roughly 36%. Bears are less convinced, arguing that prescription tracking already shows softer near-term demand, that revenue lags prescriptions because it is recognised on shipment rather than dispensing, and that a flat first quarter set a low bar for momentum. One bear-side estimate trimmed the Q3 revenue forecast from $151.8 million to $145.0 million ahead of this print.

Medicaid reimbursement data from the Centers for Medicare and Medicaid Services offers a data point on XDEMVY's real-world uptake: Medicaid dollars reimbursed rose 92% on Q1 last year, and Medicaid units reimbursed were up 85% on the same basis. The dataset covers Q1 2026 and does not constitute a forecast for the Q3 print, but the scale of the reimbursement increase confirms that payer coverage is translating into volume, the precise mechanism the bear case questions.

Ownership is concentrated in specialist hands. Deep Track Capital and RTW Investments together hold over 16% of shares, and Janus Henderson lifted its position materially to 6.4% as last reported in July. Insider activity over the past 90 days has been net negative, around $5.8 million sold, though the trades were largely executed under pre-arranged 10b5-1 plans, reducing their signal value as a conviction indicator.

Thursday's print will test whether XDEMVY's underlying prescription demand is tracking toward the top of management's annual guidance range, or whether channel inventory dynamics are masking a softer demand picture.