Following an equity financing that shored up he company’s balance sheet, GMP Securities analyst Martin Landry has resumed coverage of Aurora Cannabis (TSX:ACB) with a price target hike.

In a research update to clients today, Landry maintained his “Buy” rating, but raised his one-year price target on Aurora from $3.25 to $3.75, implying a return of 23 per cent at the time of publication.

This morning, Aurora Cannabis announced it had completed a $69-million bought deal financing. The company said it planned to use the proceeds for a domestic and international expansion. Landry says this development means the company can look squarely forward.

“With Aurora Sky now fully funded (100,000kg), and well positioned both domestically and internationally, Aurora is poised to capitalize on the growth of the global cannabis sector,” the analyst says. “We raise our target price to reflect our new recreational market assumptions. Our target is derived from a DCF analysis using: (1) a 10% discount rate (unchanged), (2) average market share of ~9% and an average EBITDA margin of ~28% (unchanged), and (3) a terminal growth rate of 3%.”

Landry thinks Aurora Cannabis will generate EBITDA of $6.3-million on revenue of $68.0-million in fiscal 2018. He expects those numbers will improve to EBITDA of $87.2-million on a topline of $230.5-million the following year.

The analyst says the company’s capacity expansion comes at the right time to capture market share.

“With the first harvest at Aurora Sky expected in April 2018, this should translate into an annual runrate production capacity of ~10,000–12,000kg leading into the opening of the recreational market,” Landry says. “We believe this places ACB among the top five largest producers in the industry at the outset of recreational; not only providing Aurora with solid positioning to capture market share, but also making ACB a strong candidate to sign supply agreements with provincial governments.”