Greenhouse grower Village Farms International (Village Farms Stock Quote, Chart, News: TSX:VFF) has announced a new agreement with Mexican conglomerate Grupo CIC, a move that analyst Russell Stanley of Echelon Wealth Partners sees as a positive for VFF.

In a note to clients on Friday, Stanley reiterated his “Speculative Buy” rating and 12-month target price of $15.00.

On Friday, Village Farms announced that it was entering an exclusive long-term agreement with Agroparque de Yecapixtla, a subsidiary of Grupo CIC, to sell, market and distribute tomatoes supplied by Agroparque.

Village Farms President and CEO Michael A. Degiglio says the deal, which expands upon a previous relationship, solidifies VFF’s value commitment to its customers. “We are thrilled to build on this existing and flourishing relationship with Agroparque de Yecapixtla. Village Farms prides itself in its ability to deliver year round consistent quality products to its customers,” says Degiglio in a statement.

Stanley says that he recently increased his price target for VFF on the back of increased production forecasts for its cannabis joint venture with Emerald Health.

“Should the JV hit the upper end of management’s target range, our forecast would support a 12-month target of C$19.00/shr,” he says. “Further potential catalysts include receipt of a sales license (targeted by July 2018), and expansion updates.”

The analyst believes there to be considerable upside to his cannabis production estimates for Village Farms, which take into account the conversion of the company’s first greenhouse (Delta 3) and currently sit well below management’s stated targets.

“The cannabis JV has the option of acquiring two other greenhouses from VFF (Delta 1 and Delta 2), and in aggregate these three greenhouses could support annualized production of 300,000kg at 68 grams/SFT, if converted,” says Stanley.

The analyst sees VFF producing an Adj. EBITDA of $4.9 million on a topline of $164.3 million in 2018 and an Adj. EBITDA of $40.0 million on revenues of $177.2 million in 2019. His valuation stems from a 14.5x 2019 EBITDA estimate and at the time of publication represents a projected return of 162 per cent.

Disclosure: Jayson MacLean owns shares of Village Farms International.