Brokers Are Optimistic About Sigma Healthcare (ASX: SIG)

Sonal Goyal

05 May 2026 10:47 PM AEST

Brokers Are Optimistic About Sigma Healthcare (ASX: SIG)

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Highlights

Sigma Healthcare shares have declined approximately 7.30% over the past year to $2.92, even as the company reported strong financial year-to-date sales growth of 16.7% for the Australian Chemist Warehouse branded store network and 24.7% for international stores — with Jefferies issuing a Buy rating and a target price of AUD 3.30.
Sigma announced a Memorandum of Understanding with GreenLight Healthcare Limited to enter the United Kingdom market under the Chemist Warehouse brand, with an initial focus on rebranding and developing up to five London-area stores — marking the Chemist Warehouse brand's entry into one of the world's largest pharmacy retail markets.
A 15-year lease for a 23,000 square metre distribution centre in Wiri, New Zealand, has been secured at a capital cost of approximately A$40 million, to support the long-term growth of the Chemist Warehouse New Zealand retail network targeting over 100 stores.

Sigma Healthcare Limited (ASX:SIG) shares rose $0.09 or approximately 3.18% to $2.92 on 5 May 2026, with a market capitalisation commensurate with one of Australia's largest listed pharmacy and healthcare distribution businesses following its merger with Chemist Warehouse. The intraday gain on the day of the Macquarie Australia Conference update reflects positive market reception of the UK market entry announcement and the New Zealand distribution centre commitment.

However, over the past 12 months, SIG shares have declined approximately 7.30% — a performance that reflects the market's ongoing recalibration of the merged entity's earnings trajectory and the capital requirements associated with its ambitious international expansion program. The short-term share price weakness contrasts with the operational momentum that Sigma's CEO Vikesh Ramsunder highlighted at the Macquarie Conference, where underlying store sales growth has remained strong even as the business cycles a significant structural uplift from GLP1 pharmaceutical sales in the second half of FY2025.

Jefferies Issues Buy Rating With $3.30 Target

Jefferies has issued a Buy rating on Sigma Healthcare with a target price of AUD 3.30 per share. With SIG trading at $2.92, the Jefferies target implies the broker believes the current market price underestimates the medium-term earnings potential of the Chemist Warehouse-branded retail network as it continues to expand domestically and internationally. A Buy rating from Jefferies — one of the major global investment banks with research coverage of the Australian market — carries significant weight in terms of institutional sentiment.

The Jefferies thesis on SIG appears to be centred on the structural growth characteristics of the Chemist Warehouse model: a high-volume, value-oriented pharmacy retail format that has demonstrated the ability to grow like-for-like sales strongly even while cycling difficult comparatives, and which now has a credible international rollout pathway across New Zealand, Ireland, the United Arab Emirates, online in China, and now the United Kingdom. The buy case hinges on the durability of CW's domestic market share, the incremental earnings from international stores, and the long-term synergies from the Sigma-CW merged entity.

Macquarie Conference Update: Sales Momentum Sustained

At the 2026 Macquarie Australia Conference, Sigma CEO Vikesh Ramsunder provided a comprehensive update on the company's operational performance across three key areas: Australian Chemist Warehouse sales, UK market entry, and New Zealand supply chain. The Australian CW branded store network delivered financial year-to-date sales growth of 16.7% and like-for-like growth of 14.4% as at 30 April 2026 — a particularly strong result given that the business is cycling the structural uplift from GLP1 pharmaceutical sales that occurred in the second half of FY2025.

GLP1 medications — a class of drugs primarily prescribed for diabetes management and weight loss — generated a significant uplift in basket size and transaction values across CW stores in H2 FY2025. Despite this elevated base, Sigma's year-to-date like-for-like growth of 14.4% demonstrates that the underlying sales momentum across the network extends well beyond the GLP1 catalyst. CEO Ramsunder noted that the average basket size of a GLP1 customer is 40% higher in units, and that GLP1 sales growth is expected to continue — providing an enduring tailwind for the network.

International Network: Accelerating Growth Across Markets

Sigma's international Chemist Warehouse branded store network — covering New Zealand, Ireland, Dubai, and online operations in China — delivered financial year-to-date sales growth of 24.7% and like-for-like growth of 11.8% as at 31 March 2026. This double-digit international growth rate validates the portability of the Chemist Warehouse retail concept across diverse markets and supports the strategic thesis that the CW brand can be successfully replicated in additional geographies with the right local partnerships.

The New Zealand network has been a particular bright spot, with sustained growth driving the decision to commit to a long-term distribution infrastructure investment. Sigma has entered into a 15-year lease with extension options for a 23,000 square metre distribution centre in Wiri, approximately 25 kilometres south of Auckland. The facility will be temperature-controlled and feature specialised storage capabilities including a vault, cool room, dangerous goods storage, and freezer facilities. Sigma's capital investment of approximately A$40 million — to be invested through FY2027 — will cover racking, warehouse automation, equipment and technology, with operations commencing in September 2026. The DC is designed to support the NZ network's long-term target of more than 100 Chemist Warehouse stores.

United Kingdom Market Entry: GreenLight JV

The most significant strategic announcement at the Macquarie Conference was Sigma's execution of a Memorandum of Understanding with GreenLight Healthcare Limited to bring the Chemist Warehouse brand into the United Kingdom. GreenLight is an employee-owned pharmacy group founded in London in 1999, currently operating 22 stores in and around the city. Under the proposed joint venture structure, Sigma will acquire a 75% interest in a number of GreenLight stores, with the remaining 25% continuing to be held by GreenLight.

Under the JV arrangement, Sigma will licence the Chemist Warehouse brand and intellectual property to the stores, and provide comprehensive retail support including product ranging, store layout, inventory management and marketing. GreenLight will contribute its dispensary and professional services capabilities, along with back-office support — a division of responsibilities that mirrors the model used by Chemist Warehouse in Australia and reflects the regulatory requirement for qualified pharmacists to oversee dispensary operations in the UK. Phase one of the JV targets the rebranding and development of up to five stores, with the first site identified at Hoxton Street in northeast London. Phase two will consider further store expansion if phase one proves successful.

1H26 Financial Results: Strong Earnings Foundation

Sigma's 1H26 financial results for the half year ended 31 December 2025 confirmed the financial strength of the merged entity. Normalised EBIT of $582.9 million was up 18.7% on the prior corresponding period, normalised NPAT of $392.0 million was up 19.2%, and revenue reached $5.5 billion, up 14.9%. Australian CW branded store sales rose 17.2% with like-for-like growth of 15.0%, while international retail network sales grew 24.5% for the half. Net debt declined $117.1 million to $635.1 million, equating to 0.6 times normalised EBITDA — a conservatively leveraged balance sheet that provides capacity for the NZ distribution centre investment and any further JV commitments.

Conclusion

Sigma Healthcare's 7.30% share price decline over the past year reflects the market's ongoing valuation reassessment of the merged CW-Sigma entity amid near-term cycling headwinds and international expansion capital commitments, rather than any deterioration in the underlying business. The company continues to deliver strong domestic like-for-like sales growth, rapidly expanding international revenues, and improving financial metrics — all while executing on strategically significant initiatives in the UK and New Zealand. Jefferies' Buy rating with a $3.30 target price signals institutional confidence that these growth drivers have not been fully reflected in the current share price.

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