The firm also lowered its price target to $46 from $55 on shares of the Beaverton, OH-based sports retailer.
"We now expect Nike's market share loss to Adidas (ADDYY) and Under Armour (UA) to continue through 2017 as our meetings with manufacturers/suppliers and competitors indicated a potential narrowing of the innovation gap for Nike's pipeline relative to the competition compared to historical levels," the firm wrote in an analyst note.
BofA/Merrill Lynch noted that the company didn't launch a new platform during the Rio Olympics this summer. The firm also estimates that Nike won't have a major platform launch in the near future.
"Given the long industry lead times (nine to 12 months) as well as strong momentum and distribution expansion from competitor brands, we believe Nike is at least 12 months away from returning to market share gains," BofA/Merrill Lynch said.
The firm added that Nike's international futures will slow in upcoming months as competition in key markets becomes more difficult.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of B.
The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
You can view the full analysis from the report here: NKE