Cannabis company CannaRoyalty (CSE:CRZ) gets a substantial target raise from Beacon Securities analyst Doug Cooper who in an update to clients on Tuesday reiterated his \u201cBuy\u201d recommendation with a new target of $13.00 (was $5.50). In these initial days of recreational cannabis both north and south of the border, distribution and retail will be the likely winners, says Cooper, who sees CannaRoyalty\u2019s California-based distribution subsidiary Alta Supply\/River Distribution as heading in the right direction and aiming to beat out the competition, while through its retail segments, CRZ represents about 70 brands and has \u201csignificant relationships with retailers,\u201d selling product to more than 70 per cent of them. \u201cGiven its early stage, we believe access to distribution and shelf space at the retailers will prove to be the differentiating factors and such companies could be the \u2018king makers\u2019 of the brands, especially in the early days,\u201d says Cooper. \u201cThis power could, in turn, allow such distribution companies\/retailers the ability to buy and own their own brands thus increasing their margins. We believe this is the strategy of CannaRoyalty and California will be its proving ground.\u201d Cooper also likes the company\u2019s proforma cash position of around $60 million or $0.85 per share, enabling it to ramp up both its distribution and retail segments, the latter of which now includes a chain of vape stores under the name 180 Smoke centring around the Greater Toronto Area. \u201cFrom a valuation perspective, we believe the shares of CannaRoyalty are undervalued,\u201d the analyst says. \u201cWhile there are only a handful of publicly-traded US-based companies at this point (albeit there is a full slate of ones set to begin trading shortly), they trade in an EV\/EBITDA (FY20) range of 4.6x \u2013 22.0x with an average of 16.9x for the top operating companies \u2013 a peer group we believe is more relevant for CannaRoyalty given its position in the California market.\u201d \u201cBased on our FY20 EBITDA forecast of $50.2 million and a recent price of $8.12 per share, the shares of CRZ trade at ~10x, a 40 per cent discount to its US peer group,\u201d says Cooper. The analyst sees CRZ generating revenue and EBITDA in fiscal 2019 of $198.8 and $13.5, respectively, and revenue and EBITDA in fiscal 2020 of $425.0 million and $50.2 million, respectively. His $13.00 target represents a projected 12-month return of 60 per cent.