March 11 (Reuters) - Goldman Sachs downgraded Avon Products Inc (AVP.N) to "sell" from "neutral" and said the world's largest direct seller of cosmetics is likely to be hit harder by the economic downturn than its peers.

"From a geographic footprint perspective, the company has the most exposure to emerging markets," analyst Andrew Sawyer wrote in a note to clients.

"We would particularly highlight the anticipated shock in Eastern Europe and a big margin hit from transactional currency moves."

The analyst, who cut his price target on the stock by $2 to $16, expects profit in Eastern Europe to decline 40 percent to 45 percent in 2009. The region accounted for 23 percent of Avon's profit last year.

Latin America has held up well so far, but there is potential for slowing results alongside further currency devaluations in markets like Venezuela, Sawyer said.

Goldman cut its 2009 estimates on the company by 5 cents to $1.50 a share, reflecting marginally weaker expectations from Europe and the United States.

"The quality of earnings is likely to remain soft with the company extending the restructuring program begun in late 2005 through 2011," Sawyer added.

Shares of the company were trading up 10 cents at $16.22 Wednesday morning on the New York Stock Exchange.

(Reporting by Archana Shankar in Bangalore; Editing by Anne Pallivathuckal)