Sigma Healthcare shares (ASX:SIG) came under heavy selling pressure on Thursday, falling 7.75% to A$2.62, despite putting up the kind of full-year growth the Street had been hoping for. Revenue came in at A$10.8 billion, up 15% to 16% year on year, with normalised EBIT up about 20% and normalised earnings per share growing just over 20%. The market, however, chose to focus on what happens next, and with the Sigma Healthcare share price hitting a new 52 week low, and down 12.08% on the past two weeks, and 10.8% lower this year, the direction of travel is clear.
The scale of the decline appears to reflect positioning and a register overhang at a time when investors are reassessing how much of the post-merger story is already priced in. At the close of trading today, around 5.0 billion Chemist Warehouse founder shares came out of escrow, creating a highly visible potential supply of stock, and reviving concerns about concentrated ownership across three major shareholder groups.
What About The Results?
Management went into the result keen to present a clean earnings picture, flagging normalised FY25 and FY26 profit and loss accounts that strip out merger and integration noise. The numbers broadly matched bullish expectations for around 20% EBIT growth, and the earlier half-year had already shown double-digit growth across revenue, EBIT and net profit, supported by solid operating cash flow and modest leverage of about 0.6 times normalised EBITDA. GLP-1-driven demand had been flagged as a visible sales driver heading into the release.
The corporate agenda has also tightened. Sigma withdrew from preliminary talks to acquire UK pharmacy chain Boots earlier this year, citing misalignment with its strategic and capital investment objectives. That decision removed one near-term risk, the possibility of a very large offshore acquisition, but it keeps international expansion on the radar and leaves the market debating how aggressively the company will deploy capital now that the Chemist Warehouse integration is under way.
Comments surrounding the growth rate from here did not exactly fill markets with confidence. The current growth rate was said to be abnormal, with a more realistic target double digit like for like sales growth. The UK business is also expected to be loss making for some time, as scale develops.
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Price Targets
The average price target on the stock sits at A$3.30, implying roughly 25% upside from the latest close. Morgans, Ord Minnett, Jefferies and Jarden have all upgraded the stock to buy over recent months, with targets in the AUD 3.05 to AUD 3.60 range and forecasts built around about 20% EBIT growth and roughly AUD 100 million in annual synergies by FY29. RBC and Macquarie are more cautious, with hold ratings and targets closer to AUD 2.50 to AUD 3.20.
Looking at the technical setup, the stock price closed below the lower Bollinger Band of A$2.85, with the 20-day midline around 2.94, marking a decisive break from the recent range and a short, sharp expansion in volatility. ADX 14 at 21.69 and rising points to a downside trend that is starting to build strength, consistent with a developing correction rather than intraday noise.
The next few sessions will be watched closely for substantial holder notices and block trades, the first hard read on founder intentions now that escrow has lapsed. The current price zone around A$2.60-2.65 has held firm since late 2024, yet with a few tests now under the belt this year so far, bears will be looking to test the appetite of buyers here. A 336% appreciation over five years looks good for longer term holders, yet the last 18 months have largely been dead money in the stock, setting the stage for an interesting end to the week.
