Expansion plans at Aurora Cannabis have GMP Securities analyst Martin Landry feeling more bullish about Aurora Cannabis, but the analyst is still not ready to recommend investors buy the stock at these levels.

On Thursday, Aurora announced it would form a joint venture with is one of the largest vegetable growers in Europe, Alfred Pedersen & Son. The move will see the company expand into Denmark with a new facility capable of producing 120,000 kg of cannabis a year.

“This is a huge next step for Aurora, establishing us as the leading cannabis company in Europe, a market of well over 400 million people, dramatically accelerating our international expansion,” said CEO Terry Booth. “We are already the leading exporter to and distributor of medical cannabis in Germany, and now have the largest funded capacity footprint in the rapidly growing European market, in which only a handful of licensed cannabis companies are currently able to operate. The relationship between APS and Larssen, who identified this opportunity for us, goes back many years through the joint development of a number of large-scale projects. This provides Aurora Nordic with a major advantage in terms of time to market and overall execution. We will be able to utilize the operational capacity of one of the largest greenhouse vegetable growers in Europe (APS), in addition to Aurora’s deep store of cannabis sector expertise, from growing to distribution. Furthermore, Mads Pedersen, APS’s CEO, is a highly respected entrepreneur in the Nordic countries, and we will be able to leverage his strong industry and financial sector network to execute on Aurora Nordic’s development and growth on favourable terms. We are very excited about this new venture and look forward to be working closely with the APS team on establishing Aurora Nordic as the dominant cannabis company in the European market.”

Landry says this is an important development, but cannot be considered with the backdrop of a stock that has been on fire of late.

“Today’s news is a significant step in Aurora’s international expansion, marking the first time the company sets production outside of Canada, While we like ACB’s growth prospects, balance sheet and its strong competitive positioning, we feel these are already reflected in the company’s share price, which is up 350% in the last three months,” the analyst says. “Aurora shares are trading at 40x CY19 EBITDA, a 44% premium to senior licensed producers, which we feel adequately reflects the company’s bright outlook.”

In a research update to clients today, Landry maintained his “Hold” rating on Aurora Cannabis, but raised his one-year price target on the stock from $6.00 to $10.00, implying a return of negative 23.3 per cent at the time of publication.

Landry thinks Aurora will generate EBITDA of $11.2-million on revenue of $69.7-million in fiscal 2018. He expects those numbers will improve to EBITDA of $101.2-million on a topline of $293.5-million the following year.