March 19 (Reuters) - J.P. Morgan Securities downgraded Expedia Inc (EXPE.O), the largest U.S. online travel agency, to "neutral" from "overweight" and said increased competition and pricing wars would cut into revenue and limit market share gains.
Analyst Imran Khan said the company's recent decision to waive booking fees on all flights booked through May 31 is likely to become a permanent change, and expects it to result in a $90 million decline in revenue in 2009.
Khan, who cut his price target on the stock to $9 from $12, said no booking fees for air tickets have become somewhat the industry norm.
"We now find it unlikely that this program will result in market share gains to offset this decline," the analyst said.
Progress in international markets has also not been seen, the analyst said.
"Despite significant investment in increasing international hotel inventory and the acquisition of Venere, we have not seen any increase in market share in Europe," Khan said.
Expedia agreed to buy Venere, an online travel agency focusing on hotel reservations, in July last year.
Shares of Expedia, which have lost 62 percent of their value in the last year, were trading down 7 percent at $7.56 Thursday morning on Nasdaq. (Reporting by Mansi Dutta in Bangalore; Editing by Anne Pallivathuckal)