HFWA shorts build ahead of May earnings

Heritage Financial Corporation heads into its May 7 Q1 results with short interest climbing at its fastest weekly pace in over a month — a notable shift for a stock that has otherwise been quietly grinding higher.

Short sellers have added meaningfully to their position this week. SI % of free float rose to 6.1% by April 28, up from around 5.6% at the start of the week — a gain of roughly 8% in seven sessions. That brings shorts back near their highest levels of the past six weeks, reversing a steady unwind that took the position down from a peak near 6.4% in late March to a low of around 5.6% in mid-April. The move is notable given the timing: it lands just over a week before the Q1 earnings call on May 7. Despite the rebuilding short book, borrow remains cheap at 0.52% and availability — at roughly 809% of estimated short interest — is extremely loose, leaving plenty of room for new shorts to enter without squeezing existing positions. This is conviction-light positioning, not a crowded squeeze candidate.

The Street remains constructive but is quietly trimming ambitions. Piper Sandler's Matthew Clark — the most active name on this ticker — lowered his price target on April 27 to $32 from $34, the second consecutive trim this year, while holding his Overweight rating. DA Davidson and Keefe, Bruyette & Woods both lifted targets earlier in the year following the company's acquisition of Olympic Bancorp. The mean target now sits near $30.60, about 12% above the current $27.21 close. Bulls point to six consecutive quarters of net interest margin expansion (NIM at 3.72% in Q1) and ROA/ROTCE targets of ~1.30% and ~14% respectively by year-end. Bears flag a $118 million drop in total borrowings to just $20 million, declining noninterest income, and macro exposure to the Pacific Northwest's employment and housing market. The P/E multiple has drifted up to about 10.8x over the past month, largely on price appreciation — the stock is up 8% over the past month even as analysts have nudged targets lower.

The broader regional bank peer group weakened on the day. Close correlates BUSE and NBTB fell 2.9% and 2.0% respectively on Wednesday, while TOWN dropped 2.8%. HFWA's own 1.4% slip on the day was comparatively modest, though the one-week picture across the group is uniformly soft. The ORTEX short score edged up to 52.2 as of April 28, its highest reading in the ten-session history shown — a mild but steady drift into elevated territory.

The most recent earnings print on April 23 produced a 3.2% one-day decline in the stock. That reaction, combined with the current pre-earnings short build, makes the pace and composition of the Q1 NIM and loan growth numbers the focal point for the May 7 release.