Above average growth is likely to be sustained in 2013. Industry mortgage volume is predicted to decline as refinancings fall as a percentage of total activity. Home purchases might not accelerate as much as some experts forecast, either. Despite that, Ellie Mae could show gains of 25%-50% next year by expanding its market share, boosting revenue per transaction, and by adding new features via acquisition. The company actively is pursuing companies with mobile, marketing, and risk management abilities. A public offering is likely to be pursued before long to finance those deals and to support the overall expansion of the business. That could dilute earnings somewhat in the short run. But it should make Ellie Mae much more difficult to overcome by competitors. In 2-3 years Ellie Mae could hold 75% of the non-major mortgage market. (The 20 largest banks hold about 50% of the entire market, which is off limits to Ellie Mae.) That's about twice the company's current market share. If the housing market recovers within that time period these shares could trade at substantially higher levels than they are now.
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