Its shares propped up in recent months by M&A hopes, Ellie Mae (ELLI -16.9%) tumbled to levels last seen in July after missing Q3 estimates and issuing below-consensus Q4 guidance, while blaming (among other things) a major slowdown in mortgage applications.
Dougherty has cut the mortgage-origination software vendor to Neutral. The firm sees declining loan origination volumes leading Ellie to "face stiffer headwinds" in 2014, and is also worried heavy spending - opex rose 28% Y/Y in Q3 - will pressure margins.
But Needham and FBR defended the company: The former says Ellie's report is "[by] no means a disaster" given industry trends, and the latter is pleased with ongoing user and bookings growth; active users for Ellie's core Encompass loan origination platform rose 39% Y/Y to 93.6K.
In tandem with its report, Ellie Mae announced it's acquiring MortgageCEO, a provider of CRM (sales) and marketing automation (ad campaign management) software for mortgage providers. Ellie Mae asserts MortgageCEO's offerings complement Encompass, and will help its clients drive loan volumes.
The purchase comes at a time when M&A interest in cloud marketing automation firms has heated up.