Sigma Healthcare's (ASX:SIG) Chemist Warehouse Group can potentially benefit from the United Kingdom's pharmacy location rules, according to a Monday Jefferies note.

The UK's pharmacy location rules make it difficult to move licences to new locations, leading to chronic low dispensing margins, which have weakened the sector and resulted in several high-profile market exits, the note said.

This may create an opportunity for a front-of-house focused operator such as Chemist Warehouse Group, provided it owns the required licences.

The investment firm believes that SIG shareholders have access to "excellent" retail franchise exposure from Chemist Warehouse. However, Jefferies said that SIG stock is "not cheap."

Jefferies kept a hold rating on Sigma with a price target of AU$2.90.

The company's shares rose 2% in recent Tuesday trade.