UBS estimates a combined earnings benefit of $8m for Sigma Healthcare from 2021 on the basis of the pharmacy wholesale funding in the seventh Community Pharmacy Agreement.
Earnings forecasts are updated accordingly, resulting in upgrades of 11-12% over the forecast period.
Any benefit, nevertheless, will be required to offset PBS price reductions and higher logistics/freight costs.
Rating is upgraded to Neutral from Sell as the stock is now considered fair value. Target is raised to $0.61 from $0.53.
Sector: Health Care Equipment & Services.
Target price is $0.61.Current Price is $0.62. Difference: ($0.01) – (brackets indicate current price is over target). If SIG meets the UBS target it will return approximately -2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
