The firm also trimmed its price target to $56 from $57 on shares of the Seattle-based retailer.
The downgrade comes as the stock is up 46% since June 27.
"We believe the business has stabilized from a margin standpoint after the proverbial storm that was Winter '15/'16, with a beat & raise likely on the horizon," Deutsche Bank wrote in an analyst note earlier today.
Wall Street has yet to realize the inherent earnings per share ahead, according to the firm.
"However, the top-line is not yet showcasing the signs of reacceleration we think are necessary to maintain a high-teens multiple, and we move to the sidelines," Deutsche Bank noted.
Additionally, the firm said it is more cautious around the top-line despite easy comparisons due to warm temperatures and the ongoing battle to reengage the high-end consumer.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on the stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations and expanding profit margins.
But the team also finds weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.
Recently, 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.
You can view the full analysis from the report here: JWN