Sigma Healthcare's FY24 underlying earnings (EBIT) were in line with the top end of management's guidance, and Morgan Stanley now has greater confidence the company's long-term earnings margin target of 1.5-2.5% will be met.

The broker increases its FY25 and FY26 profit forecasts by 55% and 37%, respectively, after raising the long-term earnings margin forecast and lowering interest expense estimates following a capital raise.

Management continues to believe the merger with Chemist Warehouse Group will complete in the 2H of FY25.

The target rises to $1.22 from 94c. Equal-weight rating with an In-Line sector view.

Sector: Health Care Equipment & Services.

Target price is $1.22.Current Price is $1.23. Difference: ($0.01) - (brackets indicate current price is over target). If SIG meets the Morgan Stanley target it will return approximately -1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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