A quarter that was hampered by a lack of supply isn’t dimming PI Securities analyst Jason Zandberg’s bullish take on Canopy Growth Corp. (TSX:WEED).

This morning, Canopy Growth reported its Q3, 2017 results. The company earned $3.0-million, or two cents a share, on revenue of $9.8-million, a topline that was up 180 per cent over last year’s third quarter revenue of $3.5-million.

“The third quarter provided new opportunities and challenges for our business, with demand largely exceeding supply throughout the quarter,” said CEO Bruce Linton. “A function of our growing patient base, the time required to move from a record harvest to sale, and an extensive phenotyping exercise to establish breeding stock and further elevate our product offering all resulted in constrained product available for sale during the quarter. The successful late-quarter harvest of the Tweed Farms facility running at full capacity has begun to ease supply constraints while at the same time we have introduced a new diversity of product into our on-line store under the Tweed, Leafs By Snoop and DNA Genetics banners, driving strong sales this month. The recent release of our first wave of new genetics and Tweed Farms product resulted in $1-million of store sales in a single day, on Feb. 1. That is a major milestone for Canopy. Two years ago, we had our first million-dollar quarter, a year ago we had our first million-dollar month and now we have had our first million-dollar day. It’s definitely trending well. We continued to push the boundaries of our business during the quarter through multiple strategic accomplishments that will help drive our future growth. We worked to strengthen our market position in Canada with our move to acquire Mettrum and the acquisition of Vert Cannabis to establish a unique brand presence in Quebec. We also established a base of operations in Germany, a strategic future market for Canopy, with the purchase of cannabis distributor, MedCann GmbH.”

Zandberg says the quarter was in-line with his expectations, as he had modeled earnings of $0.00 on revenue of $10.2-million. He says the major takeaway from the quarter was that demand was stronger than supply. It’s an issue the analyst thinks the company will solve in short order.

“There was a record harvest in Q3 but not all was available for sale due to processing and testing,” notes Zandberg. “Canopy harvested 5,265kg of cannabis (previous record in a quarter was 1,883kg) but over 3,800kg was still not available for sale by the end of the quarter. We were surprised that the costs were not lower given the large percentage of product harvested at Canopy’s greenhouse facility in Niagara-on-the-Lake. This harvest was the first harvest of size at that facility and we expect future harvests to be more efficient and lower overall cost of production per gram.”

In a research update to clients today, Zandberg maintained his “Buy” rating, but raised his one-year price target on Canopy Growth Corp. from $13.00 to $14.00.

Zandberg thinks Canopy will post EBITDA of negative $13.00-million on revenue of $43.1-million in fiscal 2017. He expects these numbers will improve to positive EBITDA of $28.1-million on a topline of $140.4-million the following year.