Morgans remains comfortable, based on Ebos Group's long track record, management will navigate the changing customer mix after announcing the loss of its Chemist Warehouse contract. The Add rating is unchanged.

The new contract, won by Sigma Healthcare ((SIG)), is to supply wholesale PBS medicines from July 2024. As a result, the broker downgrades its FY25 EPS forecast by around -16% and cuts its target to $38.07 from $44.12.

The analyst believes Ebos was likely unwilling to compete against the lower margins Sigma was happy to accept. Sigma also offered Chemist Warehouse a 10.7% equity stake and several non-core assets as part of the transaction.

Management is aiming to expand its pharmacy wholesale services to a range of other branded and independent customers.

Sector: Health Care Equipment & Services.

Target price is $38.07.Current Price is $33.21. Difference: $4.86 - (brackets indicate current price is over target). If EBO meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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