Discussion: Sigma Healthcare Limited (ASX: SIG) price drop market’s overreaction or a mere price correction.

This morning before the stock trading for the day commenced Sigma Healthcare Limited (ASX: SIG) reported on ASX the contract with Chemist Warehouse Group ending in June 2019 will not be renewed. The ASX announcement also advised estimated EBIT for FY 18/19 and FY 19/20 to be $75 million and $40 to 50 million respectively. The estimated EBIT is a departure from 90 million EBIT in 2017/18 and 100 million EBIT in 2016/17.

In response to the ASX announcement 51.2 million shares were traded on ASX and the share price dropped more than 40% by the time the market was closed.

Sigma Healthcare has a number of strengths including but not limited to;
  1. A track record of successful past acquisitions, e.g. acquisition of Herron in 2003, Amcal in 1998 and Arrow Pharmaceuticals in 1995,
  2. 19 years’ experience as an ASX listed pharmaceutical distribution company,
  3. A network of strong 1,200 stores.
Evaluation of the strengths of Sigma Healthcare begs the question does the 02/Jul/2018 sharp fall in stocks prices of the company (as a result of Chemist Warehouse Group’s contract not being extended) is an overreaction of the market or price correction.


All data and information provided in this blog post is for informational purposes only. The author will not be held liable for any losses, injuries, or damages arising as a result of using this information. All information is provided on an as-is basis.


Popular posts from this blog

Australian SaaS Medtech Platform Targets User Base Growth In Asia

Recommendation to Youtube to allow auto publish Linkedin user videos

Content piracy challenge: perceived versus actual loss of revenue, and tackling it.