Nike's Stock Slumps After Morgan Stanley Downgrade

Shares of Nike Inc. shed 3.2% in premarket trade Wednesday, after the athletic apparel giant was downgraded at Morgan Stanley, which cited the weakening of the athletic apparel industry and increasing competition. Analyst Jay Sole cut his rating to equal weight, after being at overweight since Oct. 29, 2013. He slashed his stock price target to $60, which is 8.7% above Tuesday's closing price, from $69. Sole said industry problems include the recent retail bankruptcies and consumers' shift to online shopping, which has weighed on average selling prices. Sole said the increased popularity of athleisure apparel has brought in competition from non-traditional athletic brands, which has fragmented the market and hurt ASPs. Separately, Sole said Nike apparel sales appear to have "deteriorated significantly" this year, with SportScan data indicating a decline of 1%. The stock has slumped 12% year to date through Tuesday, while the Dow Jones Industrial Average has gained 2.1%.