Cannabis company Organigram Holdings (Organigram Holdings Stock Quote, Chart: TSXV:OGI) has announced entering a letter of intent to supply the province of Quebec with a variety of cannabis products including flower, pre-rolls and oils.

The announcement puts the company in a select group of suppliers in Quebec and stands as a testament to OGI’s large-scale, low-cost cultivation capabilities as well as its broad lineup of quality cannabis products, according to Beacon Securities analyst Russell Stanley.

“While our forecasts and target price are unchanged, we view this development positively for multiple reasons,” Stanley said in a client update on Tuesday. “Firstly, Quebec is Canada’s second-largest province by population, so its sales volume potential is considerable. Secondly, we believe this makes OGI one of just three producers with distribution penetration in all 10 Canadian provinces. Finally, as management identified sales into Quebec as a priority when the company released its quarterly results last month, this announcement represents continued execution against plan.”

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The analyst says that at this point Canopy Growth and Aphria are the other two LPs with sales penetration in all ten Canadian provinces.

Stanley says OGI now trades at 12x his estimate for calendar 2020 EBITDA, which represents a 49 per cent discount to the broad peer group average of 23x and a 69 per cent discount to the 38x average at which similarly sized companies (those with fully diluted market caps of over $1 billion) trade.

The analyst says potential catalysts for OGI include an exchange upgrade, the release of quarterly results in April and continued progress on capacity expansion. He sees Organigram generating Adjusted EBITDA in fiscal 2019 of $50.0 million on revenue of $122.9 million and Adjusted EBITDA in fiscal 2020 of $97.4 million on a top line of $238.3 million.

Stanley is maintaining his “Buy” rating and $13.00 target price, which represents a projected return of 61 per cent at the time of publication.