NEW YORK (TheStreet) -- Shares of Nike (NKE - Get Report) are down by 1.63% to $54.32 on heavy trading volume Wednesday morning, as Morgan Stanley cut its rating to "equal weight" from "overweight" and BofA/Merrill Lynch downgraded shares to "neutral" from "buy."
Morgan Stanley lowered its price target by $9 to $60, noting that the U.S. apparel industry is weakening and competition is increasing as consumers shift to online spending. Adidas's (ADDYY) "strategic changes" are helping the brand regain momentum, while Under Armour's (UA) Steph Curry basketball footwear has taken 800 basis points of share from Nike so far this year, the firm added.
The current environment could persist through 2016, Morgan Stanley noted.
A sales slowdown is consequently more likely for the sportswear retailer, and Nike stock "doesn't fully account for this risk," the firm contended.
Meanwhile, BofA/Merrill Lynch cut its price target to $60 from $72, similarly noting that Nike is losing footwear market share for the first time since 2010 amid competition from Adidas and Under Armour.
Footwear growth in North America is shifting toward lower price point casual styles, the firm pointed out. BofA/Merrill Lynch added that international futures will likely decelerate after the EuroCup and Brazil Olympics shipping windows end in the 2016 fourth quarter.
About 10.27 million shares of Nike have been traded so far today, well above its average trading volume of roughly 8.52 million shares per day.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of A-.
Nike's strengths such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity outweigh the fact that the company shows weak operating cash flow.
You can view the full analysis from the report here: NKE
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 article's author.