Morgans has just upgraded its rating on ASX healthcare share Sigma Healthcare Ltd (ASX: SIG) due to ongoing share price weakness.
The Sigma Healthcare share price is $2.73 on Friday, up 0.9% today but down 7.3% in the year to date (YTD).
Sigma Healthcare merged with Chemist Warehouse last year, and also owns other pharmacy chains, Amcal and Discount Drug Stores.
The blockbuster merger, completed in February 2025, sent the Sigma Healthcare share price to a multi-decade high of $3.28 by June.
The merged group now supports more than 880 franchised pharmacies and supplies more than 3,500 chemists across Australia.
It has operations in New Zealand, Ireland, and the United Arab Emirates (UAE) as well.
Market exuberance around the deal began to wear off in the second half of last year.
The Sigma share price has fallen 17% since its peak as the broader healthcare sector also encountered multiple headwinds.
Sigma Healthcare shares touched a 15-month low of $2.58 apiece last month.
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Morgans 'prescribing long term growth'
In a new note released yesterday, Morgans said ongoing share price weakness had prompted it to upgrade the ASX healthcare share.
Morgans titled its note 'prescribing long term growth' and moved its rating up from accumulate to buy.
The broker kept its 12-month share price target at $3.36.
Morgans said it is forecasting about 20% growth in earnings before interest and taxes (EBIT) over the next few years.
The broker said it expects strong like-for-like sales growth and new stores to be rolled out domestically and internationally.
It also anticipates operating efficiencies and about $100 million per annum in synergies by FY29.
The broker commented:
Given the share price weakness, we have upgraded our recommendation to BUY (from ACCUMULATE) with an unchanged target price of $3.36 and 26% upside.
Morgans previously described Sigma Healthcare's 1H FY26 report as "solid" and in line with consensus expectations.
What do other experts think?
Ord Minnett and Jefferies also upgraded Sigma Healthcare shares to a buy rating over the past few weeks.
Ord Minnett lowered its 12-month target from $3.40 to $3.30, while Jefferies has a target of $3.05.
Meanwhile, RBC Capital recently initiated coverage on the ASX healthcare share with a hold rating and a $2.50 target.
Macquarie also has a hold rating and lifted its share price target from $3 to $3.20 early last month.
Jarden also upgraded Sigma Healthcare shares to a buy rating in late February, with a $3.60 price target.
