The analysts downgraded Target and Wal-Mart to market perform, and raised doubts over Wal-Mart's ability to sustain earnings growth in its U.S. operations, due to potential consumer pressures from rising gas prices and reduced fiscal stimulus.
In addition, the margins and returns of new Wal-Mart Express stores can drag on results, said the analysts, who had previously rated Wal-Mart and Target outperform.
Amazon.com's pricing to the consumer is superior to Target.com and Walmart.com, as we found the retailers charge higher shipping fees on identical items, the analysts wrote in a note to clients.
The proliferation of smartphones and mobile commerce could also vastly increase price transparency, which will enhance the growth opportunity for Amazon.com, they said.
Amazon.com shares were up about 2 percent at $168 in premarket trade on Thursday, after closing at $165.32 on Nasdaq on Wednesday.
Shares of Wal-Mart closed at $51.64 on Wednesday on the New York Stock Exchange, while those of Target closed at $50.24. (Reporting by Vaishnavi Bala in Bangalore; Editing by Unnikrishnan Nair)