Nordstrom’s recent earnings sell-off presents a compelling buying opportunity, according to Deutsche Bank, which upgraded the stock to a buy rating and called the drop in share price “overdone.”

“We believe Nordstrom has the best developed digital strategy within our department store coverage, with 29 percent of sales now digitally enabled,” analyst Paul Trussell wrote Wednesday. This, “combined with a relatively small store network and increasing penetration of
exclusive/limited distribution brands, positions the company well in the long run
for market share gains.”

Though the company missed first-quarter earnings in March, the analyst argued that the fact it raised the lower end of its earnings per share estimates for fiscal year 2018 was encouraging.

The analyst estimates the retailer will generate fiscal 2018 earnings per share of $3.55 versus the Wall Street consensus of $3.46, according to FactSet data.

“We see modest upside to estimates as a number of initiatives gain traction throughout the year, including the focus on the addition of new, differentiated and exclusive brands, combined with lean inventory positions at both Nordstrom and department store peers and improving macro data points,” he said.

Trussell revised his price target on shares of Nordstrom higher to $55 from $52, implying more than 20 percent upside from Tuesday’s close. The stock, however, has underperformed in 2018; shares are down 3.4 percent since January against the S&P 500’s 1.9 percent climb.

Nordstrom shares rose 1.3 percent in premarket trading following the bullish Deutsche Bank note.

— CNBC’s Michael Bloom contributed to this report.