While Japan's flagship panel maker completed its biggest two-day rally this year on Thursday, bearish bets have climbed toward a record.

Japan Display Inc. soared almost 12 percent this week, boosted by reports of strong quarterly sales of iPhones, which use the company's liquid-crystal displays. But short interest rose to 25 percent of free float as of Wednesday, approaching a record high set in May, as analysts said the company's restructuring plans announced last week were far from impressive.

"Issues around Japan Display will be long running," Damian Thong, an analyst at Macquarie Group Ltd., said in Tokyo on Thursday. Its "long-term restructure outlook is challenged by the reality of significant overseas competition."

Bears have been raising the cost to borrow JDI shares to the highest level since listing in March 2014, making it one of the most expensive stocks to short on the Topix, IHS Markit data showed.

A gauge of the cost to borrow JDI shares has more than tripled since March. Euglena Co., a manufacturer of algae-based food products, was the only stock more expensive to short.

JDI shares have tumbled almost 40 percent this year amid the lack of a clear strategy for its business in OLEDs, a display technology touted for its razor-thin structure and vibrant color presentation. The latest restructuring plan hinted at a renewed focus on developing the displays.

Nomura Holdings Inc. lowered its earnings outlook on JDI, saying its latest medium-term business plan doesn't go beyond cost cutting. Thong disapproves of the OLED strategy, saying it would make better sense for the company to focus more on its existing LCD businesses.

Last week, the struggling display maker said that it will cut 3,700 jobs mainly overseas.