Morgan Stanley have cut their price target for Sigma Pharmaceuticals from $0.43 to $0.41 due to "uncertainty surrounding SIG's future operating structure" as its contract with My Chemist and Chemist Warehouse expires next year. (Background story here)

The share price is currently up 0.4 per cent at $0.5775.

"SIG re-rated in 2016,as the company delivered on a growth strategy and secured contracting terms with Chemist Warehouse (CW). With ~41 per cent of SIG's FY18 revenues attributed to Chemist Warehouse, that customer's impending exit gives us low confidence in predicting earnings outcomes despite management's positive track record when dealing with adverse industry events. We still see potential for material risk until the Chemist Warehouse agreement expires and a firm earnings base is unfurled," Morgan Stanley's analyst write in a note to clients.

"SIG is undergoing a material ramp up in capex for its new distribution centre network,hospital pharmacy, IT platforms,etc. Given the fixed-costnature of SIG's business, we saw the return profile of these investments as highly dependent on the continuity of its relationship with Chemist Warehouse."