Bank of America Merrill Lynch has downgraded Macy's stock, predicting that the company will continue to see profits drop unless it dramatically boosts sales.

The bank changed its rating for the stock from "neutral" to "underperform," it said in a report released Thursday. The downgrade comes after the department store chain reported disappointing holiday sales and lowered its revenue and profit forecasts for 2018.

Shares of the department store are on pace for their worst day ever, tanking by about 19 percent in morning trading. Ahead of Thanksgiving, which marks the start of the holiday season, the stock had rallied more than 80 percent over a 12-month period.

"We expect a declining earnings trend in the coming years absent a sharp increase in comps," Bank of America analysts Lorraine Hutchinson and Healther Balsky wrote.

They are predicting that Macy's annual earnings per share could drop by 28 percent, from $3.98 in 2019 to $2.88 the next year.

The fourth quarter is usually Macy's strongest, boosted by holiday shopping. But while the department store had a strong Black Friday and Cyber Monday, CEO Jeff Gennette said sales weakened in mid-December and didn't fall in line with the company's estimates until the week of Christmas, according to a statement released Thursday morning.

The analysts said Macy's will need to continue to invest heavily in its stores just to maintain its current level of sales.

Shoppers have been turning away from department stores in favor of buying directly from individual brands like Nike. While Macy's has tried to lure consumers with initiatives like in-store pickup and a loyalty program, those pushes have not directly translated into sales.