HMH Holding Inc. enters its May 7 earnings call carrying the most bullish analyst backdrop of its short listed history — and a borrow market that has dramatically unwound from April's extremes.
The single defining event of the past two weeks was a coordinated wave of Street initiations on April 27. Five firms opened coverage simultaneously, every one of them bullish. Citigroup's Scott Gruber set the high-water mark with a Buy and a $30 target. Piper Sandler went higher still at $32 Overweight. JP Morgan, Stifel, and Evercore ISI filled out the rest of the slate with Buy, Buy, and Outperform ratings and targets of $26, $27, and $27 respectively. The consensus mean price target now sits at $28.67 against a current price of $22.10 — roughly 30% implied upside. Six analysts, zero bears: the Street has come out of the gate with an unusually unified view on the oilfield services name.
The borrow market tells a story of a quick, sharp squeeze that has almost entirely unwound. Cost to borrow peaked above 22% in early April — a meaningful premium for a small-cap energy name — then collapsed 91% to just 1.53% by May 5. Availability is now extremely loose at 1,723% of short interest, meaning there are roughly 17 shares available to borrow for every one currently lent out. That stands in sharp contrast to the mid-April tightness, when borrow costs were running above 15% and borrowing demand was far more competitive. Short shares themselves jumped 427% in a single day on May 5 to roughly 129,000 — notable in isolation, but with SI running at only 1.5% of the float, the absolute level remains small. The short score has drifted down to 29.3 from 40.9 in late April, confirming that aggregate short pressure has eased considerably even as the day-to-day count bounces around.
The institutional picture adds a layer of colour. Encompass Capital Advisors and Citadel entered the register as the two largest institutional holders in early April, together accounting for over 13% of shares outstanding — both are fresh positions, reported as new builds. On the other side, AKASTOR ASA, a Norwegian investment company and board-represented major shareholder, sold roughly 685,000 shares across two transactions on April 30 at prices between $8 and $11, raising approximately $6.4 million. The valuation of those trades — well below the current $22 price — suggests those transactions may reflect a different listing or currency denomination and should not be read at face value against the Nasdaq price. The CEO separately purchased 10,000 shares at $20 on April 2, a modest open-market buy that at least signals management comfort near current levels.
Q1 results, released May 6, showed revenue of $171.3 million, down from $198.4 million a year ago. Net income fell to $3.4 million from $6.1 million. The revenue miss against the prior year is the primary fundamental tension heading into tomorrow's call — the Street has just issued bullish initiations, but the topline is contracting. The prior earnings event in early May triggered a 4.8% one-day gain, suggesting the market has been willing to look through near-term softness when management commentary is constructive.
The question tomorrow is how the five freshly initiated analysts respond to a revenue decline in their first quarterly test of their thesis — and whether the bullish targets, clustered between $26 and $32, hold up against a business running below year-ago levels.
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