Soleno Therapeutics (SLNO) Valuation Check After Wolfe’s Bullish Call Challenges Short-Seller Concerns

Soleno Therapeutics (SLNO) is back on traders’ radar after Wolfe Research launched coverage with a bullish stance, pushing back against short seller driven worries about its lead drug and recent launch stumbles.

See our latest analysis for Soleno Therapeutics.

The upbeat Wolfe call has helped steady sentiment after a bruising few months. The 1 day share price return of 5.41% has partially offset a 30 day share price return of minus 22.74%, while the three year total shareholder return of 5,197.68% shows how powerful the longer term story has been, even as near term momentum has clearly cooled.

If Soleno’s volatility has your attention, this could be a good moment to scan other healthcare names and compare risk reward profiles using healthcare stocks.

With the stock down sharply from recent highs yet still sporting an enormous multiyear run, investors now face a tougher question: Is Soleno mispriced after the sell off, or already reflecting the next leg of growth?

Price-to-Sales of 27.6x: Is it justified?

Soleno trades at $50.72 with a rich price-to-sales ratio of 27.6x, which points to a potentially overvalued setup relative to key biotech valuation markers.

The price-to-sales multiple compares a company’s market value to its revenue. This metric is especially important for unprofitable, high growth biopharma names where earnings are not yet a reliable guide.

In Soleno’s case, the market is assigning a premium valuation multiple, with a 27.6x price-to-sales ratio versus the US Biotechs industry average of 11.3x and a peer average of 21.8x. Even relative to an estimated fair price-to-sales ratio of 21.4x, this level appears stretched and suggests investors may already be factoring in aggressive growth and execution expectations.

That contrast is stark. The current multiple stands well above the industry, the peer set, and the fair ratio level that the market could eventually move toward.

Explore the SWS fair ratio for Soleno Therapeutics

Result: Price-to-Sales of 27.6x (OVERVALUED)

However, lingering concerns around ongoing losses and heavy reliance on a single late stage asset mean that any trial setback or slower launch could quickly deflate sentiment.

Find out about the key risks to this Soleno Therapeutics narrative.

Another View: DCF Signals Deep Undervaluation

While the 27.6x price-to-sales ratio looks stretched, our DCF model presents a very different picture. It suggests Soleno’s fair value could be around $434.15 per share, compared with today’s $50.72. If that long term cash flow view is closer to reality, is the market underestimating the story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Soleno Therapeutics for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 920 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Soleno Therapeutics Narrative

If you see things differently or want to dig into the numbers yourself, you can quickly craft a personalized narrative in minutes with Do it your way.

A great starting point for your Soleno Therapeutics research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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