Value
8.4/10data confidence 33%| Component | Sub-score |
|---|---|
| P/S | 7.5 |
| Analyst target | 9.0 |
- ▸Attractively valued
NPCE · Why this verdict
Why Neuropace (NPCE) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
NeuroPace has beaten earnings in 3 of 4 quarters, grows revenue about 17% and burns little cash, with a 34.8% gap to the analyst target, but it depends on one product and single-source suppliers and is in a downtrend.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company is burning only 2% of revenue in free cash flow, with a gross margin score of 10 out of 10 and a current ratio score of 8.1. Quality breakdown | Free cash flow should stay close to break-even at about -2% of revenue or better. | →Stable |
| CounterThe Rule of 40 reads 15 (fail), and operating and net margins both score 0.0, so profitability is still not established. | ||
The company beat EPS estimates in 3 of the last 4 quarters with an average surprise of about 19.4%, while keeping losses small at -$0.18 per share. Earnings track record | Losses should stay near or below -$0.18 per share and keep meeting or beating estimates at the 3 November 2026 report. | →Stable |
| CounterThe latest beat was only 5.6%, down from 48% and 44% in the prior two beats, and August 2025 was a 19.8% miss, so the beat margin is shrinking. | ||
Quarterly revenue of $22.8M for the June 2026 quarter is about 17% above the $19.5M of a year earlier. Revenue quarters | Quarterly revenue should recover toward the $27.1M next-quarter estimate. | →Stable |
| CounterRevenue fell from $30.6M in December 2025 to $22.1M in March 2026, and the December figure differs by 13% between filing and yfinance data. | ||
Revenue depends on one product, the RNS System, and on single-source suppliers, and the company must avoid any disruption to either. Bear case | Quarterly revenue should stay above $22M with no supply interruption. | ↑Improving |
| CounterThe 10-K flags 2 high and 1 medium concentration risks, so a single supply or product problem could remove most of the revenue. | ||
Price of $12.91 sits 34.8% below the $17.40 analyst target, against 8.8% downside to the $12.01 stop, a reward-to-risk of 4.0. Upside pct | Price should move toward the analyst target as revenue recovers and losses narrow. | →Stable |
| CounterA death cross is in place with the 200-day average falling 2.7% over 30 days, implied volatility is 137% and quality of 3.1 is below the 4.0 floor. | ||
The company is burning only 2% of revenue in free cash flow, with a gross margin score of 10 out of 10 and a current ratio score of 8.1.
→StableQuality breakdown
- Expectation
- Free cash flow should stay close to break-even at about -2% of revenue or better.
CounterThe Rule of 40 reads 15 (fail), and operating and net margins both score 0.0, so profitability is still not established.
The company beat EPS estimates in 3 of the last 4 quarters with an average surprise of about 19.4%, while keeping losses small at -$0.18 per share.
→StableEarnings track record
- Expectation
- Losses should stay near or below -$0.18 per share and keep meeting or beating estimates at the 3 November 2026 report.
CounterThe latest beat was only 5.6%, down from 48% and 44% in the prior two beats, and August 2025 was a 19.8% miss, so the beat margin is shrinking.
Quarterly revenue of $22.8M for the June 2026 quarter is about 17% above the $19.5M of a year earlier.
→StableRevenue quarters
- Expectation
- Quarterly revenue should recover toward the $27.1M next-quarter estimate.
CounterRevenue fell from $30.6M in December 2025 to $22.1M in March 2026, and the December figure differs by 13% between filing and yfinance data.
Revenue depends on one product, the RNS System, and on single-source suppliers, and the company must avoid any disruption to either.
↑ImprovingBear case
- Expectation
- Quarterly revenue should stay above $22M with no supply interruption.
CounterThe 10-K flags 2 high and 1 medium concentration risks, so a single supply or product problem could remove most of the revenue.
Price of $12.91 sits 34.8% below the $17.40 analyst target, against 8.8% downside to the $12.01 stop, a reward-to-risk of 4.0.
→StableUpside pct
- Expectation
- Price should move toward the analyst target as revenue recovers and losses narrow.
CounterA death cross is in place with the 200-day average falling 2.7% over 30 days, implied volatility is 137% and quality of 3.1 is below the 4.0 floor.
Per-dimension breakdown
Quality
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 10.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 8.1 |
| FCF quality | 0.0 |
| Moat | 5.8 |
| Rule of 40 | 3.0 |
| Piotroski F | 4.4 |
- ▸Cash-burning: FCF -2% of revenue
- ▸Rule of 40: 15 (fail)
Growth
6.8/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 6.8 |
Momentum
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 7.6 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 8.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -2.8%/30d — confirmed downtrend
Sentiment
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.2 |
| Price target | 9.6 |
| erm sentiment | 4.9 |
- ▸Light analyst coverage (10.0) — signal dampened
- ▸Analyst upside: 55%
Insider
6.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.5 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 1.3 |
| growth rank | 6.7 |
Technical
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.4 |
| support resistance | 5.2 |
| 52w position | 3.2 |
| gap | 6.0 |
Risk (lower is worse)
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 3.4 |
| volatility | 2.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 3.8 |
| debt equity | 0.0 |
- ▸High IV: 121%
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- MOMENTUM:5.1>=4.5
- ASYMMETRY:4.1>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- EARNINGS_PROXIMITY:5d<=7d
Warning (2)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.1>=5.0 recovering
Reward-to-Risk
4.13
Upside
+34.6%
Downside
8.4%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 57
EdgeInst Constrain — Small cap ($0.4B) below institutional reach
SuitabilityAggressive — Beta 1.87>1.3, MCap $0.4B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the EARNINGS_PROXIMITY gate's 5d<=7d outcome against Value at 8.4 and asymmetric R:R of 4.13.
The strongest dimensions are Value at 8.4, Sentiment at 7.7, and Catalyst at 7.5; the weakest are Peer rank at 2.9, Quality at 3.1, and Risk (lower is worse) at 4.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 4.13 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Streak
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2Revenue Growth Recovery
Trip ifQuarterly revenue falls below $19.5M from the current $22.8M.
- P3Limited Cash Burn
Trip ifFree cash flow margin falls below -10% of revenue from the current -2%.
- P4Single Product Supplier Concentration
Trip ifQuarterly revenue falls more than 20% sequentially from $22.8M.
- P5Analyst Target Upside
Trip ifPrice falls below the $12.01 stop, a drop of more than 6.9% from $12.91.