PI Financial analyst Jason Zandberg believes there\u2019s smoke with Fire & Flower (Fire and Flower Stock Quote, Chart, News TSX:FAF), initiating coverage on December 9 with a \u201cBuy\u201d rating and target price of $20\/share for a projected return of 221.5 per cent. Founded in 2017 and headquartered in Toronto, Fire & Flower Holdings is an independent retailer of cannabis products and accessories through its 82 locations in Alberta, Manitoba, Ontario, Yukon and Saskatchewan, where the company also engages in the wholesale of regulated cannabis products and accessories. The company also has a proprietary cannabis retail and analytics platform Hifyre. \u201cWe believe that FAF is undervalued as a cannabis retailer and very little value has been attributed to its cannabis retailing technology \u2014 Hifyre,\u201d Zandberg said. \u201cWe feel Hifyre could be worth more than its retail stores.\u201d Originally known as Cinaport Acquisition Corp. II, Fire & Flower began trading on the TSX Venture Exchange in February 2019 and was rapidly expanding its retail footprint through a combination of acquisitions and organic store openings. A year into its public tenure, the company entered into an agreement with American Acres to license its Fire & Flower brand, store operating system and Hifyre technology platform for dispensaries in California, Arizona and Nevada. In August, the company officially rebranded as Fire & Flower Holdings and opened its first branded store in Palm Springs, California. Zandberg\u2019s hype around the Hifyre business particularly revolves around its proprietary technology stack, called Hifyre IQ, that the analyst sees as giving Fire & Flower a competitive advantage in retail, as well as the ability to license the technology to provide a high-margin source of revenue. The system captures user behaviour data and applies predictive analytics to facilitate the retail business\u2019 delivery of a personalized customer experience. \u201cThe most exciting part about Hifyre is the company's ability to generate highly profitable revenue by licensing the technology stack they have developed,\u201d Zandberg said. \u201cThe platform has a wide list of customers including licensed producers, traditional CPG companies, government organizations and financial institutions.\u201d The Hifyre portfolio also includes Hifyre Reach, a digital advertising and retail media network offering for licensed producers, and Hifyre One, an online digital interface for cannabis dispensaries and branded e-commerce sites for licensed producers. Since the release of Zandberg\u2019s initiation, Fire & Flower also secured an additional $30 million debt facility from Alimentation Couche-Tard, a 22.4 per cent stakeholder in the company with options to increase ownership to a majority stake at 50.1 per cent, as well as being the second largest convenience store retailer in North America. "Access to $30 million of non-dilutive debt financing is a strong show of support from our partner, Alimentation Couche-Tard. It also serves as a proof point on our alignment towards the future of cannabis retail,\u201d said Trevor Fencott, Chief Executive Officer of Fire & Flower in the company\u2019s December 13 press release. \u201cThrough their leadership, network and expertise, we are accelerating the dynamics of the retail shopping experience and creating a consumer-centric marketplace that leverages technology and data-driven insights to deliver a personalised collection of products to consumers and reaches them wherever they are at." Zandberg expects Fire & Flower\u2019s financial picture to take greater root moving forward, projecting a jump to $184 million in revenue for 2021 for a potential year-over-year increase of 43.8 per cent, followed by a jump to a projected $227 million in 2022 for a potential year-over-year increase of 23.4 per cent, punctuated by a forecasted jump to $289 million in 2023 for a potential year-over-year increase of 27.3 per cent. Looking at valuation, Zandberg projects the company\u2019s EV\/Revenue multiple to drop from the reported 3.1x in 2020 to a projected 2.1x in 2021, then dropping to a projected 1.7x in 2022 and 1.4x in 2023. Meanwhile, after a reported loss of $14 million in 2020, Zandberg projects the company\u2019s adjusted EBITDA to turn positive at $13 million for a margin of 7.1 per cent, with a projected increase to $25 million and a margin of 11 per cent in 2022, with a further expansion to a projected $47 million and margin of 16.3 per cent in play for 2023. With the move to a positive adjusted EBITDA, Zandberg introduces the EV\/EBITDA multiple in his 2021 forecast at 30.5x, then dropping to a projected 15.8x in 2022 and 8.4x in 2023. Zandberg also projects the company to turn a positive EPS beginning in 2023 at $0.25\/share; he also brings in a P\/E multiple that year at a projected 25.6x. Fire & Flower\u2019s share price has not blossomed much as of late, producing a loss of 38.6 per cent for the year to date, peaking at $14.50\/share on February 22 and bottoming out at $5.07\/share on December 3.