MedReleaf Corp’s (MedReleaf Corp. Stock Quote, Chart, News: TSX:LEAF) new deal to expand into the German medical marijuana market is good news for the company, says Matt Bottomley, analyst with Canaccord Genuity, who on Monday reiterated his “Speculative Buy” rating and $31.00 target price for LEAF.

MedReleaf announced on Monday an agreement with Cannamedical Pharma GMBH, a leading medical cannabis distributor in Germany which distributes to over 1,800 pharmacies across the country. With Germany only recently (March of last year) legalizing the medical use of marijuana and so far still lacking in significant domestic cultivators, the Cannamedical deal is a good fit for MedReleaf, says Bottomley.

“With boots already on the ground in seven international countries, we believe this agreement helps solidify MedReleaf’s exposure to a medical market that has the potential to be more than two-and-a-half times larger than the Canadian opportunity, supported by a population of over 80 million and expected full reimbursement for medical marijuana,” says the analyst in a client update.

“Further, we believe MedReleaf is currently one of only a handful of Canadian Licensed Producers (LPs) with the scale and assets in place to execute on meaningful international exposure,” says Bottomley.

MedReleaf plans to have 35,000 kg of cannabis available by summer of 2018 and, with its newly acquired property in Exeter, Ontario, the company says it now has the capacity for upwards of 140,000 kg potentially by the end of 2018.

“We believe MedReleaf is currently an industry leader on several fronts, including: (1) having one of the largest market shares among LPs; (2) operating at one of the larger built capacities; (3) a leading assortment of product offerings; and, (4) as one of the lowest-cost producers among indoor cultivators in Ontario,” says Bottomley.

The analyst forecasts revenue and adj. EBITDA of $46 million and $4.5 million, respectively, for MedReleaf in 2018 and revenue and adj. EBITDA of $164 million and $49.4 million, respectively, in 2019.

Bottomley says that Medreleaf currently trades at 14.8x its two-year forward EV/EBITDA in comparison to its peers at 20.7x. The analyst’s $31.00 target represents a projected return of 61.3 per cent at the time of publication.