Sigma Healthcare Ltd (ASX: SIG) shares are rising again today, up 1.55% to 79 cents at the time of writing.
This follows a mega announcement from the pharmacy operator and supplier yesterday that sent investors into a bit of a frenzy.
The healthcare share soared by 30% at one point yesterday after the company announced a massive new contract with Chemist Warehouse.
Sigma Healthcare estimates the deal is worth about $3 billion in annual sales to it.
The companies also renewed a contract that was generating approximately $1 billion in sales for Sigma.
As part of the deal, Chemist Warehouse will receive a 10.7% stake in Sigma Health.
Sigma Healthcare's CEO, Vikesh Ramsunder, commented:
The decision by Chemist Warehouse to award Sigma this supply contract is wonderful news for our company and our shareholders.
Sigma has worked tirelessly the past 12 months to build a stronger company and to significantly improve our operational performance for the benefit of all customers. Securing this Chemist Warehouse contract means we will now have real scale and momentum moving into the future.
Sigma Healthcare shares closed at 65 cents last Friday. They are up 22% this week so far.
Is it too late to buy Sigma Healthcare shares?
Shaw and Partners doesn't think so.
According to The Australian, the broker has responded to yesterday's big news by raising its rating on Sigma Healthcare shares to a buy.
It's been a positive year for the stock so far.
The company announced a return to profit back in March when it released its FY23 full-year results.
Sigma Healthcare announced a $1.8 million profit for FY23, up from a $7.2 million loss in FY22.
As the chart below shows, Sigma Healthcare shares have increased by 29% in the year to date.
They have vastly outperformed the S&P/ASX 200 Health Care Index (ASX: XHJ), which is up 9.3% over the same period.
