Is Sigma Healthcare share a healthy buy, after hitting new lows?

The Sigma Healthcare Ltd (ASX: SIG) share is slowly slipping toward this year’s record low of $2.74. Monday it lost another 2% to close at $2.79.

In 2025, the $33 billion dollar pharmacy group has lost 5.2% in value and in the past 6 months 10%. To put this in context, the S&P/ASX 200 Index (ASX: XJO) gained 5.4% this year.

The tumble has left some investors are asking: is Sigma Healthcare share a buy-the-dip opportunity?

Short-term headwinds

The slide in the Sigma Healthcare share reflects growing caution around short-term headwinds. Beneath the turbulence, Sigma remains a major player in Australian health care, and there are reasons to believe its long-term outlook still holds promise.

Sigma is a leading Australian pharmaceutical wholesaler and retail group, supplying medicines and healthcare goods to community pharmacies and operating brands such as Amcal, Discount Drug Stores, and Chemist Warehouse.

Rocketing integration expenses

So why has the price of the ASX healthcare share dropped? A major factor has been a steep increase in transaction and integration costs tied to its recent merger with Chemist Warehouse and restructuring efforts. The extra costs weighed on profitability, and the sharp focus on merger expenses put pressure on investor confidence.

Moreover, past operational missteps have left a mark. A poorly executed enterprise resource planning (ERP) rollout a couple of years ago disrupted supply chains. This triggered customer losses and prompted many pharmacies to re-contract with other wholesalers.

That dented market share and eroded trust in execution, forcing Sigma to restructure and simplify its business.

Powerful Chemist Warehouse synergies

Still, the Sigma Healthcare share also has solid strengths. The company’s recent merger with Chemist Warehouse has dramatically expanded Sigma’s scale, bringing together wholesale, distribution and retail under one roof. This model could deliver powerful synergies.

Additionally, the demographics underpinning demand remain favourable. An ageing population combined with rising demand for over the counter and health-related products gives the company a foundation for long-term stability.

On the flip side, risks remain. The steep integration and merger costs have dented earnings in the near term, making Sigma Healthcare shares vulnerable until those investments begin to pay off.

Is Sigma Healthcare share a buy, hold or sell?

Looking ahead, analysts offer a cautious but mixed picture. Some see value now that the shares are near recent lows, noting that the merger gives Sigma a shot at becoming Australia’s leading pharmacy-wholesale-retail group.

Broker’s recommendations span from strong buy to strong sell with an average target price over 12 months at $3.21, representing 15% upside.

UBS currently has a price target of $3.40, implying a potential gain of 18% over the next year. The broker is also expecting the company to pay an annual dividend of 4 cents per share in the 2026 financial year.

Ord Minnett has a buy recommendation on Sigma Healthcare.

The broker recently noted:

SIG has started strongly in fiscal year 2026, with Chemist Warehouse posting double-digit network sales growth and an upgraded synergies target. Furthermore, we continue to expect upside via the international rollout and private label strategies.

The post Is Sigma Healthcare share a healthy buy, after hitting new lows? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.