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Priceline.com shares down after analyst downgrade

NEW YORK (AP) -- Shares of online travel seller Priceline.com fell on Monday after an analyst warned that it may suffer from tougher competition from Expedia and travelers who increasingly use mobile devices to buy airline tickets and hotel rooms.

THE SPARK: Deutsche Bank analyst Ross Sandler downgraded Priceline.com Inc. to "Hold" from "Buy." He wrote that he's been bullish on Priceline since 2009, and that international bookings could still re-accelerate. But after the current quarter, "we see a more challenging environment" emerging.

THE BIG PICTURE: Online price sellers like Priceline already face steep competition from the airlines themselves, who have become increasingly aggressive about selling tickets directly to travelers. And it's a sharply competitive business, with other sellers just a click away. Sandler wrote that Priceline competitor Expedia is improving its "conversion rate," a term for converting a browsing, potential customer into a paying one.

THE ANALYSIS: Sandler noted other shifts, too: In the past, Priceline has benefited from travelers using search engines on desktop computers to find travel deals. It's not clear that it can get as much business from travelers using mobile devices. There's also a risk that Google will become a bigger player in selling travel, Sandler wrote.

SHARE ACTION: Down $33, or 5 percent, to $626.10. It reached a 52-week high of $774.96 in April. Its 52-week low was $438.76, on Dec. 15, 2011.

Expedia didn't fare that well, either. Its shares slid 3.3 percent to $57.93.