Morgan Stanley this morning downwardly revised its 2009 earnings estimates for companies in the retail sector, citing weakening sales and the absence of stimulus support. The analyst opined that the Street's expectations for 14% growth in 2009 earnings were "unrealistic," especially considering home prices, inflation, and employment are unlikely to improve in the near future. On average, the broker reduced its earnings-per-share estimates on various retailers by 3%, and slashed its price targets by an average of 8%.

According to the analyst, apparel and consumer electronics are 2 areas expected to continue to roll over in the near future. Meanwhile, the broker named the following equities to its underweight-rated "Fading Five" list: Abercrombie & Fitch (ANF), Best Buy (BBY), Chipotle Mexican Grill (CMG), Nordstrom (JWN), and Sears Holdings (SHLD). Morgan Stanley named the following 5 companies to its overweight-rated "Formidable Five" list: Advance Auto Parts (AAP), CVS Caremark (CVS), Darden Restaurants (DRI), Kroger (KR), and Wal-Mart (WMT).

Right out of the gate, all 10 of the aforementioned securities have fallen into the red. Posting the most notable loss so far is restaurateur CMG, trading with a $3.23 (or 3.85%) deficit to flirt with the round-number 80 level.