Soleno Therapeutics, Inc.

Based on the provided data, SLNO presents a complex and high-risk investment profile. The technical picture is alarming, with severe price declines and a negative beta suggesting extreme volatility and a tendency to fall sharply when the market dips. While the Q3 fundamentals show a remarkable turnaround toward profitability and the balance sheet is exceptionally strong with minimal debt, these positives are heavily overshadowed by a valuation that appears stretched. Metrics like the high forward P/E and extremely elevated EV/EBITDA indicate the stock is priced for perfection, despite its history of deep losses and high risk.

Buy Recommendation:

A buy recommendation is not warranted for SLNO at this time. The stock's extreme volatility, evidenced by its severe negative beta and massive drawdown, presents an unacceptable level of risk for most investors. While the recent quarterly profitability is a positive development, the current valuation appears to be pricing in a flawless and sustained recovery, which is highly uncertain. Investors should wait for evidence of consistent profitability and a stabilization in its price action before considering a position. This is a speculative stock suitable only for those with a very high risk tolerance.

RockFlow Model Forecast: Three Scenarios for 2026

Based on a comprehensive analysis, the 12-month outlook for SLNO is highly speculative and carries significant risk. The primary catalyst is the company's demonstrated ability to achieve quarterly profitability and its exceptionally strong, debt-free balance sheet, which provides a foundation for growth. However, potential risks overwhelmingly loom large, including an alarmingly high valuation that prices in a flawless execution, extreme stock-specific volatility, and a lack of a proven track record for sustained earnings.

Given the absence of analyst targets and the precarious balance between recent positives and substantial risks, investors should expect a wide potential price range, likely driven more by volatility than by fundamental progress. A re-rating would require several consecutive quarters of profitability to justify the current valuation.

Wall Street Consensus

Most Wall Street analysts are optimistic about Soleno Therapeutics, Inc.'s 12-month outlook, with consensus target around $39.41, indicating expected upside potential.

Overall, SLNO has investment potential but also faces challenges. Here are key factors to weigh before investing.

SLNO has demonstrated exceptionally poor performance over the past year, characterized by significant and sustained price declines. The stock's negative beta indicates it has moved inversely to the overall market, amplifying downside moves.

The short-term performance is starkly negative, with declines of 9.88% and 16.77% over one and three months, respectively. This represents a substantial underperformance of approximately 18.62% compared to the market benchmark during the three-month period.

Currently trading at $39.41, the stock is near the lower end of its 52-week range of $36.67 to $90.32, suggesting it is in a deeply oversold condition. Given the maximum drawdown of -57.92%, the current price reflects severe and persistent selling pressure.

Revenue & Profitability: SLNO demonstrated a significant turnaround in Q3 2025, with revenue doubling to $66 million from $32.6 million in Q2 and swinging to a net income of $26 million (39.4% margin) from a net loss of $4.7 million. The company maintains exceptional gross profit margins near 98%, indicating highly efficient core production, but profitability is heavily influenced by substantial operating expenses, particularly in R&D and SG&A.

Financial Health: The company exhibits exceptional liquidity, with a current ratio of 16.1 and a cash ratio of 7.4, supported by strong operating cash flow generation. SLNO maintains a minimal debt load, with a debt-to-equity ratio of just 0.0057, and boasts a robust interest coverage ratio of 15.9, indicating no near-term solvency concerns.

Operational Efficiency: ROE improved to 5.26% in Q3, reflecting the return to profitability, while asset turnover remains relatively low at 0.11, suggesting room for improvement in generating revenue from its asset base. The notably long cash conversion cycle of -81 days is favorable, indicating the company collects from customers long before paying its suppliers, enhancing its working capital position.

Based on the negative trailing PE ratio of -22.52, SLNO is currently unprofitable on a trailing twelve-month basis, making the TTM PE an unreliable valuation metric. The forward PE of approximately 34.6 suggests the market is pricing in a significant return to profitability. However, the extremely high EV/EBITDA of 120.45 indicates that the company's operating cash flow generation is minimal relative to its enterprise value, pointing toward a potentially overvalued scenario despite the negative PEG ratio, which is also skewed by negative earnings.

A peer comparison using industry averages is not possible due to the unavailability of data. Without this context, it is challenging to determine if SLNO's valuation multiples, such as its forward PE of 34.6 and price-to-book ratio of 4.19, are high or low relative to its sector. A conclusive assessment of its relative valuation requires benchmarking against the relevant industry peers.

Volatility risk is exceptionally high, as evidenced by the extreme negative beta of -3.182, indicating the stock tends to move dramatically in the opposite direction of the broader market. This is compounded by a severe one-year maximum drawdown of -57.92%, reflecting significant price erosion and substantial investor losses during downturns. These metrics collectively signify a highly speculative and unstable investment with amplified downside potential.

Other potential risks are notable despite the absence of short interest, which typically removes some downward selling pressure. However, a declaration of "none" suggests the stock may suffer from extremely low liquidity or lack of availability for shorting, potentially leading to wide bid-ask spreads and difficulty executing trades. This illiquidity poses a material risk, especially during volatile periods, as it can exacerbate price gaps and increase transaction costs.