Forgent Power Solutions heads into its May 14 earnings debut as a public company with short sellers building positions at pace — even as options traders turn sharply bullish.
The most striking divergence in the setup is between what shorts are doing and what options traders are signalling. Short interest has more than doubled in the past month, climbing 128% to 7.7% of the free float — with the bulk of that surge compressed into the last two weeks. Bears have nearly doubled their position since late April alone, taking short shares from roughly 4.6 million to 7.5 million. Yet despite that accumulation, borrow remains remarkably cheap at 0.39% APR, and availability is ample at 537% of short interest. There is no squeeze dynamic here; the lending market is loose, and new shorts can enter without friction.
Options positioning tells the opposite story. The put/call ratio collapsed to 0.22 on May 11 — well below its 20-day average of 0.49 and near the lowest reading of the past year. That is the signature of a market leaning into calls rather than hedging with puts. The stock has reinforced that bias with price action: up 36% in a month and 6.5% in Monday's session alone, closing at $43.02. The stock's only prior earnings event — in March — produced a 16% single-day gain. Options traders appear to be chasing a repeat.
Analysts are broadly constructive, though the coverage is still young. Seven firms initiated in early March, with Goldman Sachs and Jefferies among those setting Buy ratings and targets of $48 and $44 respectively. Oppenheimer nudged its target to $43 in mid-March. At a mean target of $43.50 against a current price of $43.02, the stock has essentially closed the gap to Street consensus — meaning further upside from here requires the company to either beat estimates materially or prompt target upgrades. Valuation is not cheap: the P/E runs near 52x and EV/EBITDA at 28x on a $1.3 billion revenue base. Morgan Stanley's Equal-Weight initiation at $38 is the lone dissenting voice, flagging that the multiple already prices in execution.
Ownership concentration adds an unusual dimension. Sponsor Neos Partners holds nearly 60% of shares and sold $987 million worth of stock on March 30 — one of the largest single insider disposals on record for a newly listed company. That overhang has not derailed the rally, but it is a structural feature worth noting ahead of any lockup dynamics.
Thursday's print is the first real test of whether the business can deliver revenue and margin visibility that justifies a re-rating above $43, or whether the Street's initial targets mark a ceiling.
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