Sigma Healthcare shares (ASX: SIG) are down 2.7% today to A$2.52, making a new 52 week low after a difficult month in the markets. The SIG share price has fallen 14.58% over the past month of trading, as markets continue to sell off following the company’s FY26 result.
The latest move below what had been shaping up as some level of support in the low A$2.60 range points to a a market that has raised the bar in what was meant to be a breakout year for the merged Sigma and Chemist Warehouse group. The structural story, built around retail pharmacy scale, distribution muscle and demand for weight-loss GLP-1 drugs, remains intact on paper. But the price action says the market is no longer willing to pay up for that story on potential alone.
Solid Financials Not Enough
FY26 was the first full year after the Chemist Warehouse merger, and the headline numbers were genuinely strong. Revenue rose 15.5% to about A$10.8 billion, normalised EBIT climbed 20.6% and the group margin lifted to around 10.1%. Normalised net profit increased roughly 22% to A$732 million, with a 4 cents full-year dividend, and realised merger synergies of about A$32-33 million put the group on track toward A$100 million a year by FY29.
The issues came underneath the headline numbers, as despite Chemist Warehouse like-for-like sales growing 13.4% across FY26, the second-half pace of about 11.8% compared with roughly 15% in the first half, a moderation the company pinned on a later cold and flu season and a very strong prior-period comparison.
Layered on top of the result is a structural supply issue, with all founder stock coming out of escrow after the FY26 result, with indications the founders may sell up to around 4.7% of issued capital. Even without a large disclosed transaction, the knowledge that a block of that size could hit the market tends to weigh on sentiment and can help explain persistent softness in the weeks that follow.
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Bulls can continue to point to Chemist Warehouse continuing to deliver double-digit like-for-like growth into FY27, more stores planned in Australia and overseas, and net debt at a comfortable level near 0.6 times EBITDA.
What Lay Ahead?
Looking to the analyst community for clues as to what lay ahead, and the average price target of A$3.20 implys ~26% upside from here. From a technical perspective, the chart matches the fundamental debate, with the stock trading essentially at 52-week lows, with an RSI near 26 stretched to the downside, while trend-strength measures around 52 point to a strong, established move rather than a choppy range.
Bulls will be looking to recapture previous support back above A$2.60, whilst the bears will be looking to see a close below A$2.50 in the days ahead. Whether the selling pressure has exhausted with the RSI overextended will be told in time, but with potential founder sales on the cards, there remains an overhang.
Bull Case:
- FY26 revenue up 15.5%, normalised EBIT up 20.6%, merger clearly delivering.
- Synergies tracking toward A$100m annually by FY29, ahead of schedule.
- Consensus target A$3.20 implies roughly 26% upside from today.
Bear Case:
- Second-half like-for-like sales slowed to 11.8%, testing mid-teens growth narrative.
- Cost growth near 9% and margin dip show integration not blemish-free.
- Founder block could sell up to 4.7% of capital, sustaining overhang.
