Barclays Analyst Sees Ellie Mae Shares Reaching Full Valuation

Barclays downgraded

Ellie Mae IncELLI

to Equal Weight from Overweight. In its report published Tuesday, the analysts mentioned three reasons for this decision.

The stock has been a top performer in software, up ~30 percent over the last 12 months versus the NASDAQ's 3 percent.

The analysts believe the risk-reward at these levels is more balanced with implied downside at $58 based on their DCF and upside of $121 based on EV/EBITDA.

The 25 percent revenue growth can be challenging beyond the fiscal 2017 year as the rate has started to slow.

Related Link: Benzinga's Top Downgrades

"ELLI has out-performed the NASDAQ by 33 points this year as it has continued to take share along with a better mortgage market, putting it on track for nearly 30 percent revenue growth this year. We step to the sidelines now as we believe risk reward is more balanced — on the upside, we continue to think ~$121, while on the downside we come to ~$58 based on our discounted cash flow analysis," wrote Barclays.

The bank kept its price target unchanged at $97.

At time of writing, Ellie Mae was down 0.76 percent on the day, trading at $92.20.

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