Soleno Therapeutics Inc’s (NASDAQ:SLNO) Profit Outlook

Soleno Therapeutics Inc’s (NASDAQ:SLNO): Soleno Therapeutics, Inc. focuses on the development and commercialization of novel therapeutics for the treatment of rare diseases. The company’s loss has recently broadened since it announced a -US$12.07m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$13.27m, moving it further away from breakeven. As path to profitability is the topic on SLNO’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SLNO’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Soleno Therapeutics

According to the industry analysts covering SLNO, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$3.45m in 2022. Therefore, SLNO is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which SLNO must grow year-on-year. It turns out an average annual growth rate of 16.03% is expected, which seems relatively fair. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqCM:SLNO Past Future Earnings June 25th 18
NasdaqCM:SLNO Past Future Earnings June 25th 18

I’m not going to go through company-specific developments for SLNO given that this is a high-level summary, however, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, a double-digit growth rate is not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I’d like to point out is that SLNO has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. This means that SLNO has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of SLNO which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at SLNO, take a look at SLNO’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should look at:

  1. Historical Track Record: What has SLNO’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Soleno Therapeutics’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.