Is SLNO's EPS performance signaling a long-term hold?

**Soleno Therapeutics' (SLNO) EPS performance suggests a cautious long-term hold approach.** Here's why:

1. **Consistent EPS Misses**: Soleno Therapeutics has experienced negative EPS figures, with the most recent being -$1.27 for Q4 2024. The company has consistently missed EPS estimates, with previous quarters showing -$1.83 for Q3 2024 and -$0.59 for Q1 2024. This trend of misses indicates underlying challenges that the company is facing.

|code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code|
|---|---|---|---|---|---|---|
|SLNO|SLNO.O|Soleno Therapeutics|2024 Q1|32.95454545454546|-0.59|186|
|SLNO|SLNO.O|Soleno Therapeutics|2024 Q2|29.62962962962964|-0.57|186|
|SLNO|SLNO.O|Soleno Therapeutics|2024 Q3|-92.63157894736844|-1.83|186|

2. **Cash Flow and Liquidity**: Despite the negative EPS, the company has shown prudent financial management. Soleno Therapeutics used $69.1 million of cash in its operating activities during the full year ended December 31, 2024, and had $318.6 million of cash, cash equivalents, and marketable securities as of December 31, 2024. This liquidity provides a buffer but does not negate the need for improved profitability.
3. **Analyst Optimism**: Despite the financial challenges, analysts have shown optimism. Oppenheimer, for instance, has increased the price target to $105, maintaining an Outperform rating. This suggests that while current earnings are not reflective of future expectations, there is potential for growth based on factors such as the recent FDA approval of Vykat XR.
4. **Institutional Confidence**: Institutional investors have shown confidence, with several recent filings indicating increased holdings. For example, Sofinnova Investments Inc. boosted its holdings by 267.7% in the second quarter, and TD Asset Management Inc. increased its position by 174.0% during the same period. This institutional confidence can be a positive signal for long-term prospects.
5. **Market Response to Catalysts**: The market has responded positively to specific catalysts, such as the FDA approval of Vykat XR. The drug's pricing and potential peak sales of $2 billion in the United States have contributed to an increased sales forecast. The company's readiness to commercialize this product promptly could lead to a turnaround.
6. **Financial Projections**: Analysts forecast positive earnings in the current year, with an EPS forecast of $7.31 for FY2025. This projection suggests that while the company is not expected to be profitable in the near term, there is a path to profitability in the future.

In conclusion, while Soleno Therapeutics' current EPS performance is under pressure, the potential for growth based on recent FDA approvals and analyst optimism suggests a cautious long-term hold approach. However, investors should closely monitor the company's ability to translate potential into actual profitability and the execution of its strategic plans.