UPDATE: Stifel Downgrades RetailMeNot

Stifel downgraded RetailMeNot SALE to Hold due to a major Google algorithm change that hit the retailer that reduced estimates.

Stifel analyst Jordan Rohan stated, "rating on shares of RetailMeNot from BUY to HOLD. Google (Hold, $555.45) released an update to its search algorithm, Panda 4.0, that reduced organic traffic to RetailMeNot's website."

Rohan continued to say, "There are three issues here: 1) The company's statement about the changing traffic patterns confirmed that traffic patterns were hit negatively, just not to the degree speculated in a blog post. We believe up to 20% of Google traffic referrals to RetailMeNot have been impacted (10% of overall traffic).; 2) The SALE investor base had grown comfortable with the growth trajectory of RetailMeNot, somewhat ignoring the Google traffic referral risk; and 3) We believe significant deceleration in revenue and EPS growth is likely. It will take weeks for the company to analyze data about the change and to attempt to mitigate the issue."

Due to this period of uncertainty, according to Rohan, the analyst believes a Hold rating is more appropriate, even after shares fell 19 percent on Thursday.

RetailMeNot closed at $25.23 on Thursday.