BWS Financial Slaps a "Sell" on Ellie Mae (ELLI)

BWS Financial initiates coverage on Ellie Mae (NYSE: ELLI) with a Sell and downside $16 price target.

The firm highlights:

• ELLI has seen its revenue grow by more than 65 percent over the past year on the conversion to a SAAS model more than two years ago.
  
  
• There is a high degree of confidence the growth ELLI has been reporting would continue. We disagree.
  
  
• Not too pleasant feedback of the software from loan officers in a close knit industry sparks the risk of user growth slowing.
  
  
• The DataTrac customers ELLI has converted from the original DataTrac could be nearly all of the customers ELLI could convert.
  
  
• Loan officers are not adaptable to change. They are focused on originating and closing loans. Making the change to a different program would be cumbersome and inefficient for many loan originators.
  
  
• We are not making a call on the third quarter. Investors could be disappointed about the fourth quarter and subsequent periods where subscriber growth numbers slow.
  
  
• Because the new revenue model is fully implemented, the year over year comparisons will become difficult with each passing quarter

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 $27.39 yesterday.

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