UPDATE: Dougherty & Co Upgrades Ellie Mae (ELLI) to Buy

(Updated - June 30, 2014 11:17 AM EDT)

Dougherty & Co upgraded Ellie Mae (NYSE: ELLI) from Neutral to Buy with a price target of $39. Analyst Raghavan Sarathy said growth acceleration and margin expansion could resume in 2015.

"We have been cautious on Ellie Mae shares this year due to difficult mortgage origination environment and back-end loaded nature of the revenue outlook but after recent meeting with the management at the company’s HQ, we came away with the opinion that the company feels confident about the 2H outlook. Further, revenue growth could accelerate next year along with margin expansion as mortgage origination volume stabilizes and expense growth moderates. We are increasing our 2014 non-GAAP EPS/revenue estimates to $0.98/$149.4 million from $0.95/$146.4 million and our 2015 non-GAAP EPS/revenue estimates to $1.25/$185.1 million from $1.16/$172.8 million. We are also initiating 2016 non-GAAP EPS/revenue estimates of $1.57/$221.5 million."

"Given our increased confidence in the 2H outlook and the potential for revenue growth acceleration and margin expansion next year, we are upgrading Ellie Mae shares to Buy from Neutral with a 12-month price target of $39.00. Our 12-month price target represents 25x our 2016 non-GAAP EPS, or a PEG of 0.9x," added the analyst,

For an analyst ratings summary and ratings history on Ellie Mae click here. For more ratings news on Ellie Mae click here.

Shares of Ellie Mae closed at $30.89 yesterday.

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