Oppenheimer Maintains Outperform On Ellie Mae But Sees Slight Upside For The Stock

Oppenheimer analyst Brian Schwartz assigned an Outperform rating on Ellie Mae (NYSE:ELLI) with a price target of $40, which represents a slight upside potential from current levels.

Schwartz observed, “ELLI’s bookings trend remained strong in 3Q14 (record bookings, added another top-20 lender) and 2015 growth guidance is bullish (~400bps above consensus), evidence the business strengthened its leading market positioning. On balance, management surprised the Street by accelerating its investment profile next year and guided for a sharp stepdown in EBITDA margins (impacted by purchase accounting for AllRegs, too). Bottom Line: The shares could experience weakness from the lower margin news, given the appreciation YTD (+46%) and as some investors struggle to understand a higher near-term spending profile and its duration (management thinks margins normalize in 2016). Nevertheless, we believe a software company should always increase spending for an accelerating business with little competition, and we remain positive long term.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Schwartz has a total average return of 12.9% and a 74.1% success rate. Schwartz has a 17.1% average return when recommending ELLI, and is ranked #555 out of 3355 analysts.

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