CDW heads into the back half of May with a striking divergence: the Street's most closely watched voice just turned bullish on the stock the same week that short sellers have been most active in over a year.
The catalyst is clear. CDW's Q1 earnings on May 6 delivered a severe shock — the stock fell 19.4% in a single session and extended losses to nearly 27% over the following five days. That reaction reset the share price to $108.59, roughly 24% below its 52-week high of $142. It also set off a wave of short positioning that has been building ever since.
Short interest has almost doubled in the past month. SI as a percentage of the free float has climbed from roughly 3.9% in mid-April to 7.0% now — the highest level in at least six months. In absolute terms, shares short rose 72% over that period to around 8.9 million. The week-on-week reading adds nuance: after peaking near 7.4% on May 22, short interest eased back modestly on May 26, down 4.6% in a day. That pullback could reflect short-sellers trimming after a quick gain, or it could be noise. The broader trend is unambiguously upward. Borrow conditions remain extremely loose, with availability at over 1,000% — more than ten shares available for every one already borrowed. Cost to borrow runs at just 0.44%. There is nothing in the lending market to deter further shorting if sentiment stays negative.
Options positioning, however, tells a different story. The put/call ratio has collapsed to 0.56, nearly 1.6 standard deviations below its 20-day average of 0.77. That is close to the year's most call-heavy reading. Earlier in April, the PCR held above 1.0 for weeks — reflecting genuine downside hedging. Since the earnings reset, options traders have pivoted sharply toward calls, implying they see the sell-off as overdone rather than the start of a deeper decline.
JPMorgan moved this morning to align with that view. Analyst Samik Chatterjee upgraded CDW to Overweight from Neutral — keeping the $130 target unchanged. That is a meaningful shift: Chatterjee had cut his target from $160 to $130 just three weeks ago following the earnings miss. The upgrade comes as the stock trades well below the consensus target range. After the May 7 wave of cuts — JPM to $130, Citi to $123, UBS to $147, Barclays to $123, Evercore to $160 — the Street consensus settled at Hold with a mean target roughly 25-30% above the current price. At a P/E of 9.9x and EV/EBITDA of 8.7x, the valuation multiples have compressed sharply over the past month (P/E down ~2.4 turns in 30 days), which supports the value argument. The forward EPS estimate momentum factor ranks in the 94th percentile — suggesting that while near-term earnings estimates came down, the longer-term growth trajectory is still well regarded.
CEO Christine Leahy added a notable data point on May 18. She purchased 4,830 shares at $103.40, a ~$500,000 open-market buy. That is a modest sum relative to the company's size, but it is a buy at a multi-year low from the top executive — and it follows a cluster of insider sales in March at prices around $118-$119. The net insider flow over 90 days is marginally positive in share terms, though that largely reflects the CEO's recent purchase offsetting routine selling by other officers.
The next scheduled catalyst is Q2 earnings, due July 29. With shorts rebuilt to a multi-month high, the ORTEX short score running near 48 — up sharply from the mid-30s in April — and an upgrade landing from JPMorgan the same week, the setup into that print is charged. The question worth watching between now and then is whether the call-heavy options skew and the Street upgrade cycle attract enough buying to start squeezing those rebuilt short positions, or whether the macro backdrop for enterprise IT spending provides fresh reasons for bears to add.
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