Following recent acquisitions by Amazon (AMZN) and Wal-Mart (WMT), Target (TGT) will face increased pressure from the competition, Citi analyst Kate McShane said, leading her to downgrade the stock to Neutral to Buy.

UNDER PRESSURE: McShane, who also lowered her price target on the retailer's stock to $56 from $63, said Target's two main competitors, Wal-Mart and Amazon, have "very quickly changed the game" with their recent deals for Jet.com, Bonobos and Whole Foods (WFM). Target's strategy of separating itself through offering immediate access to a range of food skewing towards fresh, natural, and organic has "effectively been muted" by Amazon's acquisition of Whole Foods, McShane wrote. In addition, Wal-Mart's acquisitions of online apparel retailers that target millennials highlight Target's lack of in-store and online differentiation, she said. With Target already under pressure from declining brick-and-mortar traffic and its key differentiator, Signature, decelerating, the analyst thinks revenue growth will be tougher to achieve absent a "game changing move" of its own. She added she believes Target deserves a more modest valuation as the company has been inconsistent in its guidance and management may "lack foresight into near-term drivers of traffic trends." Target has also already realized big catalysts for growth over the past couple of years through the close of its underperforming Canadian segment, the sale of its pharmacy business to CVS (CVS), cost cuts and improved capital allocation, she said.

PRICE ACTION: Target shares were roughly unchanged at $50.89 in early afternoon trading, though over the last five sessions the stock is down about 12%.