Energy Transfer LP has steadied after last week's sector-wide drop, but beneath the surface a quiet tug-of-war is playing out between a Street that still sees meaningful upside and a slow but steady rebuild in short positioning.
The price tells the simpler story first. ET closed at $19.54 on Tuesday, down less than 1% on the week but up 1.4% on the day — a partial recovery from the 3.9% slide that defined last week's note. The midstream complex has broadly tracked the same path. Closest peers OKE and KMI are both down roughly 4% on the week, while WMB is off nearly 7%. EPD held up better, losing under 2%. 's relative resilience within the group is worth noting — the stock is performing in line with or above its most correlated peers on a weekly basis.
The more interesting development is in short interest. Bearish positioning has been creeping higher for a month. Short interest now amounts to just under 1% of the free float — not a crowded short by any standard — but the direction of travel has been consistent, rising roughly 12% over 30 days. The bulk of that build came in a step-change around May 8, when shorts jumped from under 29 million shares to above 30 million within a week, and have since ticked higher to 32.6 million. That said, the lending market gives no indication of stress. Borrow availability is essentially unlimited — the 52-week low availability reading never dropped below roughly 3,000% of short interest — and cost to borrow has collapsed from a peak above 6.5% in early May to just 0.68% today. Shorts are rebuilding on the cheap, with no squeeze pressure anywhere in the lending pool. Options confirm the calm: the put/call ratio of 0.17 is near the bottom of its 52-week range and barely a whisker above its 20-day average. There is no hedging urgency showing up in the derivatives market.
The Street remains the most constructive voice on the name. The analyst consensus has not moved meaningfully since the wave of post-Q1 upgrades documented last week — Morgan Stanley's raise to $23 from $21 on May 27 was the most recent action, and even that came with a hold on the Equal-Weight rating. The mean price target of around $23.59 implies approximately 21% upside from the current price, a gap that remains unusually wide for a midstream partnership with predictable cash flows. Factor scores reinforce the bullish tilt: the analyst recommendation differential ranks in the 90th percentile, the dividend score sits in the 88th percentile, and forward EPS growth ranks 74th. The short score of 29.4 is low and has barely moved over the past two weeks, consistent with the picture of a stock where bearish conviction is building slowly rather than aggressively.
The bear case does carry some weight. Free cash flow turned negative in Q2 as capital expenditures surged, and the backlog slipped 19% year-over-year — signs that the growth pipeline may be thinning even as near-term volumes hold up. Bulls counter with the gathering volume growth story and the strategic depth provided by Sunoco and USA Compression. The EV/EBITDA of 8.3x has compressed modestly over 30 days, and a P/E of 12.8x keeps valuation from looking stretched.
The next scheduled earnings event is August 5. Between now and then, the conversation is likely to centre on whether the capital spending drag on free cash flow proves transient — and whether the wide analyst target gap narrows through price appreciation or through target cuts.
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