Canaccord Genuity analyst Neil Maruoka thinks Aurora Cannabis (TSXV:ACB) could become a significant player in the German marijuana market.

On Friday, Aurora Cannabis announced it had acquired Pedanios GmbH, a German company that wholesales medical cannabis to more than 750 pharmacies in the EU.

“Pedanios, with first-mover success in the EU, has proven itself as one of the world’s most trusted and scalable importers, exporters and distributors of wholesale medical cannabis. Patients, physicians and pharmacies across the EU recognize the Pedanios brand as the trusted source for high-quality GMP-certified medical cannabis,” said Aurora CEO Terry Booth. “The Pedanios team share Aurora’s vision, our high standards and our intentions to play a leading role in shaping the future of the global cannabis industry. In addition, because the average market prices are higher in Germany than in Canada, we expect German sales to positively impact our average sales price per gram.”

Maruoka says this deal opens up a whole new market for Aurora.

“We view the acquisition of German medical cannabis distributor Pedanios GmbH for total consideration of ~C$20.9 million in cash and shares to be a significant positive step towards Aurora’s international expansion,” says the analyst. “Although a relatively modest sum, as a major importer and distributor of medical cannabis in Germany, Pedanios will, in our opinion, provide Aurora with an entry into an attractive and growing market with the possibility of near-term cannabis sales into this new channel. Pedanios has run-rate revenue of ~C$6 million, and we expect it could generate EBITDA of just less than C$1 million this year, suggesting modest accretion for Aurora; however, we believe that the potential for cannabis sales could nonetheless provide upside, particularly when Aurora Sky comes on line later this year. We note that Pedanios’ management will continue to run the business as they are locked in with shares vesting over a three-year period.”

In a research update to clients today, Maruoka maintained his “Speculative Buy” rating and one-year price target of $3.25 on Aurora Cannabis, implying a return of 30.5 per cent at the time of publication.

Maruoka thinks Aurora will generate EBITDA of $7.9-million on revenue of $27-million in fiscal 2017. He expects these numbers will improve to EBITDA of $80.2-million on a topline of $192-million the following year.