Even Target's autumn home decor collection seems to know which way the stock's been heading lately. Image source: Target.

We're more than two months away from the holiday shopping season, but at least one Wall Street pro is making changes to his wish list. Cowen analyst Oliver Chen is reshuffling his ratings on the country's two leading discount department store chains. He's lowering his rating on Target (TGT 1.55%) from outperform to market perform. At the same time he's boosting his call on Wal-Mart (WMT 0.26%) from market perform to outperform.

Switcheroos don't happen often. Analysts often sour or get bullish on entire industries, but that's not the case here. Chen feels that Target's losing market share, in part, to Wal-Mart. 

Target has posted year-over-year declines for three consecutive quarters and the shortfalls are accelerating. Comparable-store sales are negative, and Chen feels that recent initiatives to beef up its grocery and pharmacy offerings aren't resonating with shoppers. Chen singles out the decline in fill-in traffic, customers that come in to grab just an item or two on the fly. Whether those lost customers are turning to Wal-Mart or online retailers, the point is that they're not doing it at Target. 

Chen is no longer bullish on Target. He's slashing his price target on the "cheap chic" retailer from $75 to $68.

Sam Walton would be proud

If Target is losing share to Wal-Mart and online retailers, it's probably a good thing that Wal-Mart is acquiring Jet.com to gain some more skin in the dot-com game. That's just one of the reasons why Cowen's Chen turned bullish on the world's largest retailer yesterday. 

Sales at Wal-Mart are holding up better than at Target. U.S. comps have been positive for eight consecutive quarters, and traffic is also on the rise. Chen feels that we're still in the early innings of Wal-Mart's revival. The chain's investments in training and higher wages are elevating the shopping experience, resulting in two-year highs in customer satisfaction surveys.

Perhaps more important for Wal-Mart's reputation as a shrewd provider of roll-back pricing, the extra investments in its workforce haven't gotten in the way of its aggressive pricing on merchandise. Chen is boosting his price target on Wal-Mart stock from $76 to $83.

When did Target stop being cool? It's easy to pin the blame on the data breach during the 2013 holiday shopping season. It ultimately settled two years later, but exposing roughly 40 million credit and debit card accounts isn't something that "Tar-zhay" has been able to overcome. 

Yield chasers may gravitate to Target's 3.5% payout, beefier than Wal-Mart's still-impressive 2.8% rate. However, Wal-Mart's the one with momentum clearly in its corner for a change. Shoppers see it, and now another analyst does, too.