(Adds analyst, details of listing, updates share price)
By Sarah Morris
MADRID, June 23 Shares in online travel agency
Edreams Odigeo lost a third of their value on Monday
after the company said late last week that rising competition
would hurt its business, prompting analysts to cut profit
The company, which offers travel deals in 42 countries
through websites such as Go Voyages and Opodo, said on Friday
the search business was becoming more competitive, particularly
in its biggest markets of France, Italy and Spain.
Its shares were down 35.8 percent at 5.65 euros ($8.0) by
1405 GMT. They had fallen 8 percent on Friday when the company
had reported its first results since listing on the stock
exchange in April, becoming the first company to float in Spain
in three years.
A company spokeswoman said she was not aware of any factor
behind the fall in the share price.
JP Morgan and Societe Generale were among
the brokers which cut their target price for the shares.
"The company will need to invest more in this context than
previously anticipated to attract clients," Societe Generale
analyst Sabrina Blanc said in a note.
Societe Generale, which has a "buy" rating, cut its target
price to 11 euros from 13 euros, and downgraded profit estimates
by 6 to 10 percent for the next three years.
Analysts also said changes in May to Google's algorithm -
the formula and process used for online searches - was likely to
have hit eDreams' model since it gets a lot of its business via
"eDreams are able to manage the natural search impact but as
around previous algo updates, this is a probably a 12 month
exercise," David Reynolds, analyst at brokerage Jefferies, said
in a note.
Over the past few years, Google has made several
changes to its search algorithm.
eDreams' outlook for next year was now for high single digit
revenue growth, rather than double digit, and core earnings
margins may reduce, he said.
"Dropping the first guidance following IPO is clearly
disappointing and we sense how and what the team communicate
over the coming days will be key to investor perception," said
Reynolds who has a "buy" recommendation on the stock.
Edreams on Friday reported a 14 percent fall in 2013
earnings before interest, tax, depreciation and amortisation
(EBITDA) to 83.5 million euros, hit by one-off costs such as its
Its net loss for the period ending March shrank by 10
percent to 21.1 million euros.
It said its net debt was 354 million euros, putting its debt
to EBITDA ratio at 2.98 times.
Edreams raised 433 million euros from its April listing,
valuing the company at 1.5 billion euros including debt of 390
But the stock, which opened up at 10.25 euros, fell 7
percent in its first day of trade.
($1 = 0.7366 Euros)
(Additional reporting by Robert Hetz. Editing by Fiona Ortiz
and Jane Merriman)