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Is Ellie Mae headed for another record year?

Stock up 46% in 2015; predicted to continue rising

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It’s all coming up roses for mortgage software solution provider Ellie Mae (ELLI) right now, and the good times don’t appear to be ending any time soon, according to a new report from RBC Capital Markets.

The company reported record revenue in fourth quarter of 2014, with its net income rising 153% from the same period in 2013. The company’s fourth quarter performance completed a record year for Ellie Mae, in which the company posted record revenue of $161.5 million, up 26% from $128.5 million in 2013.

The company’s record year was also reflected in its stock performance, which saw Ellie Mae’s stock open 2014 at $26.77 and close 2014 at $40.32, an increase of more than 50%.

The company has ridden the wave of its strong 2014 into a roaring start for 2015, with Ellie Mae’s stock up more than 46% in 2015, trading at $58.80 as of 1:03 p.m. Eastern.

According to the new report from RBC, the stock is going to continue rising in 2015.

RBC is increasing its price target on Ellie Mae to $65 and categorized the company’s stock as “outperform,” citing better loan origination volume for Ellie Mae and other factors.

“Despite the stock's performance year-to-date, we remain positive on the shares given our view of positive revisions to numbers. While RESPA-TILA could create some seat growth headwinds in 2Q15 and mortgage volume growth is expected to slow in 3Q15, we believe estimates have upside,” RBC Capital Markets analysts Ross MacMillan and Matthew Hedberg said in the report.

Click the image below for a look at Ellie Mae’s performance over the last couple years.

Ellie Mae stock

“We continue to think there is upside to our estimates based on: better loan origination volume; conservative assumptions on variable revenue per active user; and conservative assumptions on seat bookings,” the analysts continued.

Ellie Mae is scheduled to release its first quarter results following market close on April 30, but the company itself predicted a strong start to 2015 when its fourth quarter results were released in February.

“Our successes in 2014 and our robust pipeline give us ongoing confidence in our growth strategy, Ellie Mae CEO Jonathan Corr said in February. “We are entering 2015 well positioned to continue to grow market share and revenues.”

The analysts at RBC concur.

“The industry has experienced better loan origination volumes so far this year when compared to expectations at the end of January 2015. In addition, loan origination growth expectations for 2Q15 and CY15 have increased. We think this bodes well for variable revenue at ELLI and we have increased our forecasts accordingly,” the analysts said.

“Increased mortgage origination activity could result in an increased number of loans processed and transaction services ordered through the Ellie Mae platform,” the RBC analysts added. “We estimate that a 10% increase in mortgage volumes results in a 1.5% uplift in revenue for Ellie Mae.”

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