What happened

Marijuana stock Canopy Growth (NYSE:CGC)(TSX:WEED) saw its shares shoot 14.6% higher today after Cowen & Company bumped up the price target for its shares on the Canadian exchange.

So what

Canopy Growth's shares have been rocketing higher since Constellation Brands (NYSE:STZ) announced a massive $4 billion deal last month to increase its ownership stake from less than 10% to nearly 38%. 

A hand lifts a marijuana leaf into the sky.

IMAGE SOURCE: GETTY IMAGES.

Despite the rapid run-up in Canopy Growth's valuation since Constellation Brands announced its decision, Cowen and Company analyst Vivien Azer reiterated the company's outperform rating today, telling investors that shares of Canopy Growth listed on the Toronto Exchange are worth $74 Canadian dollars per share, up from CA$56 per share previously.

According to reporting by StreetInsider, Azer believes an "ability to establish an early lead in the adult use cannabis market, as well as domestic and international medical cannabis markets" justifies the increase in her target price. 

WEED Chart

WEED data by YCharts.

Now what

Canopy Growth's valuation has surpassed $11 billion, and that's undeniably pricing in a lot of success for the budding marijuana Goliath. In Q2, Canopy Growth's sales were CA$26 million, up 63% year over year, and as a result, shares are trading at an eye-popping valuation of over 100 times annualized sales.

Nevertheless, the opportunity associated with capitalizing on legal cannabis is massive. According to Barclay's, the legal and illegal marijuana market is worth $150 billion per year, and according to CIBC World Markets, Canada's recreational cannabis market could be worth between $5 billion to $10 billion annually, depending on per-gram prices, after Canada's recreational market opens for business next month.

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.