Sigma Healthcare Ltd (ASX: SIG) shares have been on a strong run recently.
Since the middle of September, the Chemist Warehouse owner's shares have outperformed the S&P/ASX 200 index (ASX: XJO) with a gain of around 13%.
However, one leading broker is calling time on the rally on the belief that its shares are about fair value now.
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What's happening?
According to a note out of Bell Potter, its analysts are expecting a good update from the company at this month's annual general meeting. This is thanks largely to strong demand for GLP-1s. It said:
SIG will conduct is AGM in Melbourne on 21 October when it is expected to provide a 3 month trading update. LFL network sales growth is the key performance measure. The group reported 14.7% growth for this metric in 1Q FY26 aided by store refurbishments and GLP-1 tailwinds.
In FY27 the bar is raised higher by virtue of the larger revenue base, nevertheless, the global GLP-1 phenomena continues with demand for private prescriptions likely to continue to increase. The downstream benefits will also flow, i.e. GLP-1 customer basket size is on average 40% larger than other customers, being mostly sales of protein and other dietary supplements. We expect 1Q27 network LFL network sales growth in the range of 12-13%.
Looking ahead, Bell Potter believes the launch of new GLP-1s will be supportive of growth for the ASX 200 share. It adds:
The next chapter of the GLP-1 growth is about to commence with the upcoming registration in Australia of the oral formulation of Lilly's blockbuster GLP-1 medication – Mounjaro. The oral formulation (branded Foundayo) is expected to gain TGA approval in late CY26. The drug gained FDA approval in the US in April 202[6] with the US DTC launch in June 2026. June qtr 2026 global revenues reached US$98m.
Elsewhere sales of Mounjaro (being the original injectable formulation) continue to grow rapidly. Lilly's 2Q global sales increased 90% vs pcp to $US9.9bn. The read through to the Australian market is similarly positive where we believe private prescriptions for GLP-1 medications represent at least 44% of total prescriptions sold. All of this is a tailwind for SIG which is a major beneficiary of foot traffic into pharmacies for the purpose of prescription medicines.
ASX 200 share downgraded
In response to recent share price strength, Bell Potter has downgraded Sigma Healthcare's shares to a hold rating (from buy) with an unchanged price target of $3.00.
Based on its current share price of $2.83, this implies modest potential upside of 6% for investors over the next 12 months.
Commenting on the downgrade, Bell Potter said:
The recent flight to safety away from tech is probably responsible for the rally in the SIG market price over recent weeks, nevertheless the stock remains expensive relative to growth outlook. In the absence of a significant upgrade, our recommendation is adjusted to Hold from Buy. PT is unchanged at $3.00.
