Elevated inventory persisted over the March quarter amid falling sales for Blackmores, which has recognised the need to reposition its business to better cater for the Chinese market.

A merger of Australian Pharmaceutical Industries and Sigma Healthcare is logical but ACCC issues are uppermost in broker views.

Uncertainty is likely to hinder Sigma Pharmaceuticals until a firm earnings base is established after the exit of its major customer.

Stockbrokers are still not keen on buying Sigma Healthcare shares, though a capital return might change their view.

Several issues, mostly one-off, plagued Blackmores in the March quarter and some brokers query whether the growth profile justifies the elevated valuation.

Soft retail conditions continue to cast a cloud over Australian Pharmaceutical Industries and brokers expect growth in FY18 will be a challenge.

Michael Gable of Fairmont Equities suggests Blackmores may be building a base for a technical recovery.

Sigma Healthcare’s dispute with Chemist Warehouse had sounded warning bells for brokers.

Given poor prospects for growth in PBS revenue, brokers expect Sigma Pharmaceuticals will need to rely more on its expansion into other revenue lines.

Michael Gable of Fairmont Equities suggests Blackmores is showing signs of a technical recovery.