Wal-Mart's ( WMT) legal troubles and strained public image might be catching up with it, sending Wall Street into the arms of its soon-to-be streamlined rival, Target ( TGT). While shares of both companies rose in Tuesday's rally, Target has drastically outperformed its rival over the past year. The shares got a boost Tuesday after its investment rating was boosted on the belief that its high-quality discount goods and exclusive merchandise are starting to add up to the better shopping experience. "Target has established a well-positioned discount store franchise by offering an above-average discount store customer a more upscale shopping format highlighted by exclusive branded merchandise with a noteworthy strength in softlines," said Mark Mandel, an analyst at Fulcrum Global Partners, in a Tuesday research note. He upgraded Target shares to buy from neutral with a $50 12-month target price. The stock rose $1.50, or 3.5%, to $44.27, bringing the gain to about 10% over the past 12 months. Shares of Wal-Mart ended Tuesday up $1.25, or 2.4%, to $53.90, but they are down about 6% since this time last year. Target, which is in the process of offloading its sagging department store chain Marshall Field's and nine of its Mervyn's stores to May Department Stores ( MAY), hasn't struggled as much as other discounters in the last year, Mandel said. (His firm doesn't do investment banking for either company.) That's because it doesn't cater as strictly to the low-income consumer bracket as Wal-Mart, he said. In addition, its relationships with well-known designers, including Isaac Mizrahi and Mossimo, have lately given Target an edge over Wal-Mart. "Target's customers have captured the bulk of the benefits from the economic recovery," said Mandel, who thinks the sustainable turnaround is another positive for the company. In turn, he lifted his second-quarter earnings forecast to 47 cents a share, in line with the current Wall Street consensus. Mandel's old estimate was 45 cents a share.