Sigma Healthcare Ltd (ASX: SIG) shares are trading in the green on Thursday afternoon. At the time of writing, the ASX-listed pharmaceutical company's share price is 1.47% higher at $3.10 each.
It's been a great year for Sigma Healthcare shares, and they're now trading 66.94% higher than 12 months ago.
The business held its first annual general meeting (AGM) since completing its merger with Chemist Warehouse yesterday. The combined entity's market value is currently around $35 billion. This ranks Sigma Healthcare as one of the largest healthcare companies listed on the ASX.
Its successes have fed through to its financial report, too. At its AGM, the company reported revenue of $6 billion for FY25, representing an 82% year-over-year increase. It also reported a 40% hike in net profit after tax.
Following Sigma Healthcare's AGM and financial results, Macquarie Group Ltd (ASX: MQG) wrote a note to investors revealing its expectations for the healthcare giant and its shares going forward.
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Macquarie sees downside risk ahead
The broker confirmed its underperform rating on Sigma Healthcare shares and raised its target price to $2.90. Macquarie's previous target price of $2.50 was placed on the shares in August.
"Target price rises ~16% to $2.90 based on DCF methodology, driven by long-term EBITDA/free cashflow upgrades given higher LFL sales growth," Macquarie said in its note.
"Retain Underperform. We are becoming more confident on the outlook for LFL sales, and lift our long-term assumptions following the update. However, with SIG trading on ~50x FY26E P/E and a P/Eg ratio of ~2.5, risks are skewed to the downside of disappointment to long-term growth expectations."
What else was said about Sigma Healthcare and its shares?
In its note, Macquarie commented that Sigma Healthcare provided a brief trading update for 1Q FY26 alongside its AGM. It revealed expectations that Chemist Warehouse (CW) like-for-like (LFL) network sales will grow 14.7% versus the prior period in 1Q26.
Management called out strong performance across "key categories" and GLP1 as major tailwinds. For the remainder of FY26E, the network will begin to cycle more meaningful contributions from GLP1 which became material from Oct-24. As a result, we expect LFL sales growth to slow, but remain elevated (MRE 1H26E: +12%; 2H26E: +9%). Comps are becoming increasingly tougher to cycle, and the key from here will be sustained prescription/take-up of GLP1s, in addition to ongoing momentum in front-of-store sales.
Aside from LFL sales growth, Macquarie said other drivers of company earnings remain intact. It also noted that Sigma Healthcare management called out "i) Continuing roll-out of domestic and international stores consistent with historical patterns; and ii) expansion of own and exclusive label brands to support margins".
"Combined with network sales growth and synergies from the SIG/CW merger, we forecast a normalised EBIT CAGR of ~24% over the next three years."
