Australia's Sigma Healthcare's revenue surge doesn't quell overvaluation concerns, says Morningstar

Sigma Healthcare

20/03/2025 22:03

** Retail pharmacy franchisor Sigma Healthcare's SIG.AX shares are considered overvalued by Morningstar despite in-line earnings

** Full-year underlying EBIT growth more than doubled to A$68 mln was within co's forecast - Brokerage

** Adds revenue surged 46% to A$4.8 bln, mainly due to increased prescription volumes supplied to Chemist Warehouse (CW)

** However, gross margins in H2 shrank more than anticipated to 5.4% due to lower-margin prescription medicine sales - Morningstar

** Brokerage adds that SIG's market cap is similar to grocer Woolworths WOW.AX at over A$34 bln, suggesting a P/E ratio of 42 for fiscal 2029, including earnings from CW indicating overvaluation

** Morningstar maintains A$1.65/share fair value estimate

** Stock up 11.1% YTD

 (Reporting by Kumar Tanishk in Bengaluru)

 ((Tanishk.Kumar@thomsonreuters.com; X: @thatstanishk;))