Pacific Crest Starts Ellie Mae (ELLI) at Overweight
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Pacific Crest initiated coverage on Ellie Mae (NYSE: ELLI) with an Overweight rating and a price target of $124. Analyst Brent Bracelin anticipates strong revenue and profit growth.
"ELLI has emerged with one of the most profitable SaaS models, balancing high growth and high margins to become the leading cloud software platform in the mortgage industry, and has just ~5% penetration of a $6.25 billion TAM. We see a favorable risk/reward profile based on our forecast that revenue and profits should double over three years," said Bracelin.
"Our Overweight rating is based on the assumption that Ellie Mae can maintain 25% to 30% growth in revenue and profits through automation share gains, even if mortgage volumes decline by 5% to 10% annually. EV/ EBITDA of 28x our 2017 estimates drives our $124 target, a slight premium to the fourand-a-half-year average FTM EV/EBITDA of 23.9x, but warranted, in our view, given bestin-class SaaS margins and growth," added the analyst.
Shares of Ellie Mae closed at $98.80 yesterday.
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