A difficult year for Target is getting worse. Wall Street is now more worried about Amazon's threat to Target after the e-commerce giant's $13.7 billion deal to buy Whole Foods Market.

Target shares fell 5 percent Friday on the news of the deal. The stock is down 29.5 percent this year after the retailer's disappointing financial results. The S&P 500 has gained 9 percent.

Citi Research on Wednesday lowered its rating for Target to neutral from buy, saying its food business is at risk due to Amazon.

"With Wal-Mart enhancing its e-comm portfolio with Jet.com and Bonobos over the past year through acquisitions that target millennials and AMZN's sizable entry into fresh/organic food w/ WFM acq., TGT's two main competitors have very quickly changed the game," analyst Kate McShane wrote in a note to clients Wednesday. "This makes TGT's rev. growth prospects through organic or acq. growth tougher to achieve, absent any kind of game changing move."

McShane reduced her price target for the company to $56 from $63. The lower target would be a 10 percent gain from Tuesday's close.

The analyst noted that food is approximately 22 percent of Target's sales and that it has been able to differentiate itself somewhat by offering consumers all-in-one access to food and household products. That competitive advantage will be diminished when Amazon has Whole Foods' network of stores, she said.

"TGT's strategy of differentiating itself from AMZN and WMT through offering immediate access to food/HPC [household and personal care] and having a differentiated mix skewing to fresh/natural/organic has effectively been muted," she wrote.

Target spokesperson Erin Conroy in an email response to this story wrote:

"We recently announced a multi-year plan to position Target to deliver consistent growth and market share gains by elevating the shopping experience for our guests. We're making a more than $7 billion investment in our business, which includes technology and supply chain enhancements, reimagining the design of more than one-third of our stores, accelerating the opening of small format stores around the country and introducing twelve new brands to our exclusive merchandise assortment over the next two years.

Food and beverage is a key category for Target, representing about 20 percent of our annual sales. More importantly, it's part of our guests' shopping journey and something they want to find at Target. As we've shared, we are on a journey to create a differentiated experience in food and beverage. While the work won't be done overnight, we are committed to getting it right for the long term and are encouraged by the progress that we are making."

Target shares were essentially flat midday Wednesday at around $51 a share.

CNBC's Michael Bloom contributed to this story.

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Wall Street bails on Target after Amazon's deal for Whole Foods - CNBC