Bank of America downgraded shares of Target ( TGT) Wednesday, saying the company has surprised the Street with its achievements in the last year and, consequently, the stock has become too expensive.

"We like what Target is doing, but we are not alone," said analyst Aram Rubinson, who lowered his investment rating on the discount chain to neutral from buy. He referred to three problems at the company that Wall Street was focused on last year -- credit, earnings and department stores -- all of which have become diminishing concerns in 2004.

Shares of Target were recently down 47 cents, or 1.1%, to $43.24.

Rubinson noted that a year ago, the Street was worried about Target's credit business because retailers in general have "rarely been successful with credit." But Target achieved its objectives month after month and its credit business has continually improved, he said. Bank of America has done investment banking for Target.

"Target is ably managing a business that has tripped up many a retailer," said Rubinson.

Another issue analysts were concerned about last year was Target's ability to meet its earnings guidance, especially in the fourth quarter, without added help from its credit business. But Rubinson noted that EPS rose 18% at Target stores in the fourth quarter and gross margin increased 60 basis points, minus the credit division.

Further, the company preannounced upside to its first-quarter results on April 8, saying it expects earnings to come in ahead of the First Call median consensus for 45 cents a share.

Lastly, analysts have long been concerned about the lackluster sales and earnings power at its two department store chains, Mervyn's and Marshall Field's. "Target's ownership of those businesses prevented many from getting too interested in the stock," said Rubinson.

But last month, Target announced that it will likely sell the two chains, a move the Street reacted to by bidding up shares of the company. "The good news is that Target can now focus all of its energies on enhancing its core operation," said the analyst. "The bad news is that the Street has already 'piled on.'"

As a result, "Target is three-for-three with the Street -- a rare achievement," Rubinson said. But, at around $43 to $44, the stock is nearing the analyst's $46 price target. He said valuation has priced in 25% value for future growth compared with 0% last year.

"Those buying the stock today will need to push estimates higher and higher to make the stock work," Rubinson concluded.