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Nike just isn't doing it lately

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Nike (NKE) CEO Mark Parker was named Fortune's Businessperson of the Year in 2015. But he has found himself on the defensive in 2016 as the company's shares have slumped about 11 percent, the biggest decline among Dow Jones industrials components. The problem: concerns about slowing growth and rising competition.

The athletic apparel and footwear giant's stock has also sorely underperformed the broader market as measured by the S&P 500, which has gained more than 6 percent since January.

Even so, Nike has plenty of fans on Wall Street. Most of the 30 analysts that cover the stock rate it a "buy." Their average price target is $65.79, about 18 percent higher than the current price of around $55. Brian Yarbrough, an analyst with Edward Jones, is among the minority who's not bullish on Nike.

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"I don't think the next four or five years are going to be near as easy as the last four or five," said Yarbrough, who rates Nike a "hold." "There really was no competition until 2013-14 when Under Armour started getting into the footwear business. Adidas and Reebok were pretty much an after-thought. ... Nike kind of had the market ... in the U.S. basically to themselves."

He thinks Nike is at a disadvantage when it comes to pricing. It has lost ground to Baltimore-based Under Armour, which charges about $130 for a sneaker from its popular Stephen Curry line, far less than Nike commands for its LeBron James and Kevin Durant shoes (upper $100s to $200s) and its Michael Jordan brand (which can cost $300).

Adidas, which also has lagged Nike for years, is gaining ground as well on its Beaverton, Oregon-based rival in the running-shoe market. "We're hearing from some of the footwear retailers than some of their best sellers are Adidas products," Yarbrough said, adding that Nike can no longer count on consumers being willing to pay ever-increasing prices.

Nike recently reported that futures orders, a leading indicator for sales that Wall Street watches closely, gained a disappointing 13 percent in the most recent quarter. The company's overall revenue lagged analysts' expectation, while profits were flat. Even more worrisome for investors was Nike's North American business, where sales were little changed at $3.7 billion.

If sales continue to stagnate, Nike might lose shelf space at retailers, which are concerned about being too dependent on one particular brand, according to Yarbrough. A spokesperson for Nike didn't respond to an email seeking comment for this story.

Getting a company like Nike, with a market capitalization topping $93 billion, to grow at all can be a herculean task. Even so, Parker has said he expects revenue to hit $50 billion in 2020, nearly double the $32.3 billion in sales analysts expect this year. Yarbrough says it's going to be difficult for Nike to meet that goal.

"If you had asked me that a year-and-a-half ago, I would have said they would probably hit it because they were doing so well," Yarbrough added.

Parker has been well paid for his efforts. His total compensation nearly tripled to $47.6 million in fiscal 2016 fueled by an increase in stock awards tied to his assumption of the chairman's role from Knight, which became effective at the end of June.

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