If you read my work, you know that I’ve been pounding on the table about a correction in Walmart Inc (NYSE:WMT) stock for some time.

We finally got that pullback. Walmart stock dropped more than 10% after the company reported a fourth quarter earnings dud. Revenue beat expectations, but the burgeoning e-commerce business cooled off at a worrisome rate. Meanwhile, earnings missed the mark, and the fiscal 2019 profit guide came in below expectations.

Walmart stock has yet to recover. In the few days after its big drop, the S&P 500 has rallied 0.5%. But Walmart stock kept dropping. It’s down another 1.5% in that same time frame.

In other words, the weakness in WMT stock has been persistent for a few days. I expect it to be persistent for a few weeks — and even a few months.

All in all, I think Walmart stock could be in for a tough 2018.

Why Walmart Stock Will Struggle in 2018

Coming off its best year since 1999, Walmart stock looked ripe for a big pullback. The valuation had run up to historically unsustainable levels on the idea that Walmart was morphing into Amazon.com, Inc. (NASDAQ:AMZN) and leaving Target Corporation (NYSE:TGT) in the dust. The dividend yield had fallen to historic lows; the stock had climbed to historic highs.

And yet, the WMT growth narrative really wasn’t all that great. Comparable sales growth was running around 2-3%. Margins were falling. Earnings growth was meager. The only things to get really excited about that supported the “second coming of Amazon” thesis were booming e-commerce sales and a huge 2019 earnings bump thanks to tax reform.

But the fourth quarter report dismantled those catalysts. Walmart’s 2019 earnings guide was a wide miss — and that’s a big problem. Earnings in 2019 are supposed to get a big boost thanks to tax reform. The Street was expecting earnings to go from $4.42 in 2018 to $5.13 in 2019. Instead, WMT management guided for earnings of $4.75 to $5 in 2019, the midpoint of which was 5% below Street estimates.

Worse yet, e-commerce sales growth cooled to 24% in the fourth quarter. It was running around 50% and up before that, so a fall to 24% is a big step-down. There was a tough lap in there due to the Jet.com acquisition, but still — a halving of digital sales growth is shocking. Even management admitted there were some “operational challenges” in the e-commerce business.

Moreover, Target is expected to report digital sales growth in excess of 25% this quarter. That would mean that, for the first time in a long time, Target’s e-commerce business is growing at a faster rate than Walmart’s e-commerce business. That is a shocking turn of events in the Walmart narrative, and flips the script from “becoming the next Amazon” to “still competing with Target”.

To that end, Walmart stock will continue to experience weakness because it still trades at an unreasonable premium to Target stock. The 5-year average valuations on WMT and TGT stocks are essentially the same. But across all important valuation metrics, WMT stock still trades at a healthy premium to those historical standards, while TGT stock trades at a discount.

Both of these stocks will normalize in 2018, as Target ramps and Walmart cools, implying upside for Target stock and downside for Walmart stock.

Bottom Line on WMT Stock

Eventually, WMT stock is a “buy the dip” situation.

But not yet.

This stock still has a ways to drop before it’s reasonably valued. I’m looking to buy Walmart stock once the forward earnings multiple approaches 16. With 2019 earnings estimates sitting at $4.90, that means I start to get interested in Walmart stock once it gets closer to $80.

Until then, I’m sitting on the sidelines.

As of this writing, Luke Lango was long TGT and AMZN.