SLNO
SLNOSoleno Therapeutics is a biopharmaceutical company developing treatments for rare diseases.
It is a clinical-stage firm focused on addressing unmet medical needs through its lead candidate for Prader-Willi syndrome.
Updated: January 14, 2026, 16:00 EST
Investment Opinion: Should I buy SLNO Today?
Analysis of SLNO (Soleno Therapeutics Inc.)
Technical Perspective: SLNO exhibits deeply oversold conditions after severe price declines, now trading just 5% above its 52-week low. The extreme negative beta indicates high volatility with amplified losses during market downturns, presenting substantial near-term risk despite potential for a technical rebound.
Fundamental Perspective: SLNO's Q3 2025 results show remarkable improvement - revenue doubled sequentially to $66 million with a 39.4% net profit margin, representing a strong turnaround from previous losses. The company maintains exceptional financial health with minimal debt, high liquidity, and negative cash conversion cycle, though operational efficiency remains mixed with low asset turnover.
Valuation & Risk Assessment: The stock appears significantly overvalued with a forward P/E of 34.6 and extremely high PS ratio of 22.61, suggesting premium pricing not yet justified by current fundamentals. Primary risks include extreme volatility (negative beta of -3.124) and substantial historical drawdowns exceeding 53%, though the strong Q3 performance indicates potential business model viability.
Recommendation: HOLD - While the impressive Q3 turnaround and clean balance sheet provide fundamental support, the combination of extreme volatility, substantial valuation premiums, and proximity to recent lows suggests waiting for more consistent profitability and reduced price volatility before establishing positions. The current risk-reward profile favors monitoring subsequent quarters for sustained operational improvement rather than immediate entry.
SLNO 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Based on the provided analysis, here is a 12-month outlook for SLNO:
12-Month Outlook for SLNO
The primary near-term catalyst for SLNO will be its ability to sustain the remarkable operational turnaround demonstrated in Q3 2025, with subsequent quarterly earnings reports being critical to validate the business model's viability and justify its premium valuation. The exceptionally clean balance sheet with minimal debt provides a stable foundation for this growth. The most significant risk remains the stock's extreme volatility, characterized by its deeply negative beta, which exposes it to amplified losses during any market downturns and poses a challenge for stable price appreciation. Given the absence of an analyst target and the conflicting signals of strong recent fundamentals against high valuation and volatility, a target price is not established; investors should focus on whether the company can deliver consistent profitability to support its current price.
Wall Street Consensus
Most Wall Street analysts are optimistic about SLNO's 12-month outlook, with consensus target around $42.46, indicating expected upside potential.
Bulls vs Bears: SLNO Investment Factors
Overall, SLNO has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Strong Q3 Financial Performance: Earnings and revenue beat analyst expectations for the quarter.
- $100 Million Share Repurchase: Signals management's confidence in the company's value and future.
- Rapid Patient Adoption: VYKAT XR achieved over 1,200 patient starts shortly after launch.
- Significant Perceived Upside: Some analysts project a potential 164% upside for the stock.
Bearish
- Disappointing Drug Launch Momentum: Reported slowdown in demand and high discontinuations for VYKAT XR.
- Steep Stock Price Decline: Shares plummeted over 26% due to investor concerns about launch performance.
- Securities Class Action Investigation: Law firm investigating potential securities claims, creating legal overhang.
- Investor Scrutiny and Confidence Loss: Market reacted sharply to negative news despite positive financials.
SLNO Technical Analysis
SLNO has experienced severe underperformance with deep losses over recent periods, significantly lagging the broader market.
The stock shows steep short-term declines with recent drops of 16% and 37% over one and three months respectively, dramatically underperforming the market by 40 percentage points during the latter period. The extreme negative beta of -3.124 indicates highly volatile inverse correlation with market movements, amplifying losses during market downturns.
Currently trading near $41.51, the stock sits just 5% above its 52-week low of $39.43, having declined 54% from its 52-week high of $90.32. With a maximum drawdown exceeding 53% and proximity to recent lows, the stock appears deeply oversold rather than overbought despite the substantial negative momentum.
| Period | SLNO Return | S&P 500 |
|---|---|---|
| 1m | -18.4% | +1.3% |
| 3m | -33.4% | +5.7% |
| 6m | -52.0% | +10.6% |
| 1y | -12.6% | +16.5% |
| ytd | -10.0% | +1.1% |
SLNO Fundamental Analysis
Revenue & Profitability SLNO demonstrated a strong turnaround in Q3 2025, with revenue more than doubling sequentially to $66 million and achieving a net income of $26 million, resulting in a robust net profit margin of 39.4%. This represents a significant recovery from the Q2 loss of $4.7 million, driven by a substantial improvement in operating profitability. The company maintains an exceptionally high gross profit margin of over 98%, indicating minimal direct costs relative to its revenue.
Financial Health The company exhibits excellent financial health, with a minuscule debt ratio of 0.47% and a very strong current ratio of 16.1, reflecting a highly liquid balance sheet. Operating cash flow coverage ratios are robust at over 15.5x, and the cash conversion cycle is negative (-81 days), which suggests the company is able to collect from customers well before it needs to pay its suppliers. This strong cash position is further evidenced by a cash ratio of 7.4.
Operational Efficiency Operational efficiency shows mixed results, with a respectable return on equity of 5.3% but a relatively low asset turnover of 0.11, indicating that revenue generation per dollar of assets is modest. The high fixed asset turnover of 26.8 suggests efficient use of property and equipment, though the very low inventory turnover of 0.17 points to potential challenges in inventory management. The company's operational performance improved significantly quarter-over-quarter, moving from negative to positive returns.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Level: SLNO's negative trailing PE ratio indicates the company is currently unprofitable, while its forward PE of 34.6 suggests anticipated future earnings. The elevated PB ratio of 4.51 and exceptionally high PS ratio of 22.61 point to significant premium pricing relative to the company's current asset base and revenue stream. The negative PEG ratio and extremely high EV/EBITDA of 120.4 further confirm substantial overvaluation based on current financial metrics.
Peer Comparison: Without industry average data, a precise peer comparison cannot be conducted. However, the extremely high PS ratio and EV/EBITDA multiple suggest SLNO trades at substantial premiums that would likely exceed most industry norms. This valuation profile appears aggressive relative to typical market standards, particularly given the company's current lack of profitability.
Investment Risk Disclosure
Volatility Risk: SLNO's extreme negative beta of -3.124 indicates it exhibits violent price swings in the opposite direction of the broader market, representing exceptionally high systematic volatility risk. This is compounded by the severe 1-year maximum drawdown of -53.09%, demonstrating a substantial historical loss of capital and significant downside volatility.
Other Risks: While the absence of short interest removes one source of potential selling pressure, it does not inherently mitigate other risks. The combination of extreme volatility and a major drawdown warrants careful assessment of the stock's underlying liquidity and the fundamental viability of its business model.
FAQs
Neutral; while the stock appears deeply oversold and the company has strong financials with a significant Q3 turnaround, substantial risks persist related to the disappointing launch momentum of its key drug and an ongoing securities class action probe. This high-risk profile, combined with extreme volatility indicated by the negative beta, makes it unsuitable for risk-averse investors. The stock may appeal only to speculative, high-risk-tolerant investors betting on a successful drug launch turnaround.
Based on current metrics, SLNO appears overvalued. Its forward PE of 34.6 and exceptionally high PS ratio of 22.6 significantly exceed typical market standards, particularly for a company with recent profitability. While Q3 2025 showed impressive revenue growth and a 39.4% net margin, the valuation multiples price in extremely optimistic future growth that may not be sustainable given the company's modest asset turnover (0.11) and negative trailing earnings. The premium pricing reflects high growth expectations rather than current fundamental justification.
Based on the provided information, here are the key risks of holding SLNO stock, ordered by importance:
1. Extreme Volatility Risk: The stock's extreme negative beta of -3.124 subjects it to violent and amplified price swings inversely correlated with the broader market, posing a severe risk of sudden, major capital depreciation. 2. Business Model Sustainability Risk: Despite a recent strong quarterly profit, the history of severe underperformance and a -53% maximum drawdown raises fundamental concerns about the long-term viability and consistency of the company's revenue streams. 3. Operational Inefficiency Risk: The very low inventory turnover of 0.17 indicates significant challenges in managing inventory, which could lead to obsolescence issues and inefficient use of working capital, threatening profitability. 4. Market Sentiment Risk: Trading near its 52-week low after a 54% decline from its high, the stock faces significant negative momentum and weak investor sentiment, which can be difficult to reverse even with improving fundamentals.
Based on the robust Q3 2025 results and strong financial health, the forecast for SLNO through 2026 is optimistic but hinges on sustaining its operational turnaround.
1. Target Price Range: The base case target for late 2026 is $55 - $65, contingent on consistent quarterly profitability. A bull case, assuming accelerated market adoption and sustained 98%+ gross margins, could see the stock reach $75 - $85. 2. Key Growth Drivers: The primary drivers are (1) the proven ability to convert high revenue into substantial net income (39.4% margin), (2) an exceptional, debt-free balance sheet providing a stable platform for growth, and (3) the negative cash conversion cycle, which fuels internal funding. 3. Main Assumptions: This forecast assumes the Q3 2025 profitability is repeatable and not an anomaly, that the company can maintain its premium gross margins, and that it effectively deploys its strong cash position to drive revenue growth. 4. Uncertainty: The forecast carries high uncertainty due to the stock's extreme volatility, the challenge of validating a new business model with only one quarter of strong profits, and the lack of consensus analyst targets for benchmarking.