In mid-January, Target (TGT) - Get Target Corporation Report pre-announced a lousy holiday quarter (4Q fiscal year 2016) and lowered guidance for fiscal 2017. The stock sunk 5% on the news. Investors were surprised by the report, especially since the company put up a decent third quarter.

Target, whose shares are down 15% in the last 12 months, reports results on Tuesday. In January, the company said holiday same-store sales for November and December would be down 1.3% and lowered its adjusted earnings-per-share forecast. Analysts were looking for flat comps.

For the fourth quarter, management sees earnings per share of $1.45-$1.55 versus the previous estimate of $1.65. Previously the company told analysts it expected $1.55 to $1.75 per share.

The mix/shift between stores and e-commerce, plus the highly promotional environment hit fourth quarter margins pretty hard. The consensus now stands at EPS of $1.51 and $20.7 billion in revenue. For the full year, EPS are expected to range from $5.00 to $5.10.

Although Target's Signature Categories (Style, Home, Baby, Kids and Wellness) are growing in excess of same-store sales, the remaining two-thirds of the business is underperforming. Electronics and Entertainment posted high-single-digit comp declines and Household Essentials and Food posted low-single-digit declines.

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Meanwhile, Target is selling at a steep discount to its historical valuation. Analysts are expecting full-year earnings of $5.06 per share on $69.6 billion in revenue. At the current quote, the stock is trading at just 13 times EPS estimates. Usually Target trades between 16 and 17 times estimates.

For investors will a long-term outlook, this could be an opportunity to buy a world-class retailer at a sharp discount. The gap between the performance of the S&P 500 and TGT is the widest it's ever been in the past 10 years. Hundreds of stores across the U.S. have been closing (i.e., Kmart, Sears (SHLD) , Macy's (M) - Get Macy's Inc Report , etc.), which lessens competition. Target also seems to be making all the right moves by focusing its efforts on its signature categories and reinvigorating its advertising machine.

Furthermore, the sale of its in-store pharmacies to CVS (CVS) - Get CVS Health Corporation Report should pay off over the next two years as customers begin to adapt to the change. Also, Target has more than 1,000 stores equipped with digital ordering and in-store pick-up versus 460 last year. E-commerce sales are up 30% versus last year.

In conjunction with its earnings release, the company will hold an analyst meeting in New York with investors. With so much negative investor sentiment around retail, any good news could pop the stock dramatically.

While there are few near-term catalysts to meaningfully improve the top line, if Target can catch a few breaks, the stock could soar off the backs of the bears that have overstayed their welcome. I think Target could trade as high as $80, or 15 times next year's EPS estimates of $5.35.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.