With its most recent equity financing complete, GMP Securities analyst Martin Landry has resumed coverage of Canopy Growth Corp. (Canopy Growth Corp. Stock Quote, Chart, News: TSX:WEED) with the same bullish target.

On Wednesday, Canopy announced it had completed a previously announced bought deal worth just over $200-million by selling 5.8-million shares at $34.60. The company said it plans to use the proceeds for domestic and international expansion, R&D, and technology investments, amongst other things.

Landry, who says that with a pro forma cash balance he estimates at more than $545-million, estimates that most of Canopy’s expansion plans are fully funded. The analyst says he is looking forward to the company’s third quarter results, due in a week. But he cautions that it’s still to early to judge Canopy on a purely numbers basis.

“Canopy is expected to report Q3FY18 results on February 14th,” Landry notes. “We believe investors’ attention will be focused on management’s comments regarding the upcoming recreational market and less on current results given the sizeable expected increase in revenues and profitability. Our estimate calls for revenues of $19.6m, up 12% YoY, boosted by improved product mix (higher soft gel sales) and also from higher international sales. We expect a continued mismatch of revenues and expenses as Canopy grows its infrastructure to prepare for the recreational market. Hence, our forecasts call for adjusted EBITDA of negative $5m, slightly worse sequentially and YoY.”

In a research update to clients today, Landry resumed coverage of Canopy with a “Buy” rating and a one-year price target of $40.00, implying a return of $40.00, implying a return of 37.2 per cent at the time of publication.

Landry thinks Canopy will generate EBITDA of negative $18.6-million on revenue of $75.0-million in fiscal 2018. He expects those numbers will improve to EBITDA of positive $78.8-million on a topline of $372.4-million the following year.

Landry listed three reasons he is bullish on Canopy Growth Corp.

“1. Constellation partnership reinforces leadership. The investment by Constellation Brands catapults WEED into a league of its own. The company has a credible partner on which it can draw resources to accelerate its go to market strategy for the recreational market in Canada. Both of these increase the company’s first mover advantage.

2. Significant market share potential in Canada. In Canada, Canopy is the most geographically diverse LP with operations in seven provinces. This local exposure has been favorable to the company and resulted in supply agreements with New Brunswick, Newfoundland and P.E.I., the only three provinces to announce their suppliers thus far. We believe that Canopy’s significant production capacity and local reach should benefit the company in other provinces in Canada and enable the company to capture a leading market share of the domestic recreational market.

3. Strong international platform. Canopy has crafted one of the widest international footprints in the industry with investments in Germany, Denmark, Spain, Brazil, Chile, Australia and Jamaica. As global medical cannabis programs develop, this platform should open multiple distribution opportunities for Canopy, providing optionality for the company to allocate its expected large production capacity to the most profitable sales channel.”