Nike is no longer an attractive investment after its recent rally, according to one Wall Street firm.
HSBC lowered its rating to hold from buy for Nike shares, citing weakness in the U.S. market and the stock's valuation.
The company's shares are up 17 percent this year through Monday compared with the S&P 500's 16 percent return. The stock is up more than 10 percent since Nike gave mid-teens annual earnings-per-share growth guidance for the next five years during its investor day last month.
"Nike management provided insight into a compelling future at investor day but the present is tricky and shares have done well," analyst Erwan Rambourg wrote in a note to clients Tuesday. "We have cut estimates short term to take into account lower growth in the US but have not changed our FY May 2020 estimates or our target price. … This implies little upside, hence our downgrade."
Nike shares declined 1.7 percent in Tuesday's premarket session after the report. Rambourg reaffirmed his $62 price target for Nike shares, representing 4 percent upside from Monday's close.
The analyst reduced his Nike 2018 earnings-per-share estimate to $2.46 from $2.60 and lowered his sales forecast to $36.3 billion from $36.8 billion for the same year.
Rambourg also noted that Nike's forward price-to-earnings multiple now matches Adidas' even though it is growing more slowly than its competitor.
Nike's valuation relative to growth and to Adidas is "not as compelling here," he wrote.
Nike did not immediately respond to a request for comment for this story.
— CNBC's Michael Bloom contributed to this story.