5 Best Small-Cap Healthcare Stocks to Buy According to Hedge Funds

3. Soleno Therapeutics Inc. (NASDAQ:SLNO)

Soleno Therapeutics Inc. (NASDAQ:SLNO) is one of the 7 best small-cap healthcare stocks to buy according to hedge funds.

On March 18, Oppenheimer maintained an Outperform rating on Soleno Therapeutics Inc. (NASDAQ:SLNO). The firm reduced its price target from $110 to $80, resulting in a potential upside of more than 166%.

Oppenheimer cited a slower expected U.S. launch ramp and a shift toward a standalone European commercialization strategy. Despite this, it added that its revenue outlook for 2026 remains above consensus, with upcoming catalysts expected to provide support to the shares.

On February 27, Wells Fargo reduced its price target on Soleno Therapeutics Inc. (NASDAQ:SLNO) from $114 to $110 while maintaining an Overweight rating on the stock. The firm argues that the shares are cheap based on the value perspective relative to its projected FY2026 revenue and cash flows.

Wells Fargo shared its stance despite some skepticism about comments on building the pipeline and LCM for Vykat XR, as well as the retirement of the CFO, which detracts from the current-period investor takeaway story.

Soleno Therapeutics Inc. (NASDAQ:SLNO) is a clinical-stage biopharmaceutical company that is involved in developing novel therapies that target rare diseases like Prader-Willi Syndrome. Its leading product is Diazoxide Choline Extended-Release tablets, VYKAT XR. The company began commercialization of VYKAT XR in April 2025, following FDA approval.