Travelzoo took a beating Wednesday amid otherwise light trading for Internet stocks, after an analyst wrote that the company's stocks are overvalued and will see continued pressure from competitors.

Shares of Travelzoo Inc., which lists travel deals on its Web site and in newsletters, plunged fell $3.78, or 11 percent, to $31.55 on the Nasdaq.

"We believe Travelzoo's business has a very limited sustainable competitive advantage and is simply an advertising arbitrage and aggregation vehicle for travel deals," wrote Stifel Nicolaus analyst Scott Devitt in a note to investors.

Devitt downgraded the New York-based company's stock to "Sell" from "Hold."

The analyst wrote that Travelzoo's success is tied to the growth of online travel agencies such as Priceline.com Inc., which have fared well of late, but that its shares are trading at such a premium to Priceline.com's that they're overvalued by about 26 percent. At that rate, he calculated Travelzoo should be trading around $26 per share.

Get the full story at chron.com