Estimates that Groupon Inc is worth $25 billion are very high because the largest online daily deals company is losing money, Benchmark Co analyst Fred Moran said on Friday.

Even based on a forgiving revenue multiple approach, a $25 billion valuation is rich compared to Internet and e-commerce companies including Google Inc, Amazon.com Inc and eBay Inc, Moran said in an interview.

Moran is one of the few sell-side analysts to have published research on Groupon. The company is working toward an initial public offering later this year and many major investment banks and brokers are underwriters. That prevents them from publishing research opinions on the company.

Benchmark is not an underwriter and the company does not deal in the stock, Moran said.

Estimating Groupon's valuation is tricky because the company is growing quickly and nobody knows when it might start making money. Benchmark's Moran said he came up with the $25 billion valuation based on media reports.

Moran reckons Groupon can generate $3.96 billion in revenue this year. A market value of $25 billion is roughly six times those sales.

Groupon's valuation will likely appear high relative to industry peers and our Internet e-commerce sector, the analyst wrote in a note to investors on Friday.

A group of seven publicly-traded Internet and e-commerce companies, including Google, Amazon and eBay, traded below three times estimated 2011 revenue, according to a June 10 report by neXtup Research.

NeXtup estimated Groupon was worth about $14 billion in that report, based on multiple of 3.5 times revenue.

Moran expects Groupon to have a successful IPO.

To go public with losses would normally present a challenge, he said. But the daily deals industry is so young and growing so fast, and Groupon is so dominant, that it can probably go public based on a revenue multiple.

After Groupon disclosed second-quarter results this week, Moran raised his revenue estimate and cut his loss forecasts for the company. That was partly because Groupon spent less money on marketing.

(Editing by Robert MacMillan)

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