Costco Wholesale (COST) shares may benefit from potential catalysts such as a special dividend or stock split, indicating the "recent underperformance" is temporary and further weakness is a buying opportunity, Oppenheimer said Tuesday in a report.

Oppenheimer reaffirmed Costco as a top pick even with investor sentiment "as the most negative we have seen in some time."

Fiscal Q1 results are due Thursday, and "we would take advantage of the recent dislocation and any weakness on the print should it materialize," the report said.

Costco shares have dropped 3% this year and 18% since mid-February, trailing the broader market and major retail peers, Oppenheimer said. US comparable sales softened slightly in October and November with the slowdown attributed to temporary factors, including government shutdown concerns, rather than weakening demand, the report said.

Oppenheimer boosted its Q1 earnings forecast to $4.27 a share from $4.21 to match the Wall Street consensus.

Oppenheimer said it looks "very favorably" upon Costco's long-term outlook, pointing to its strong value proposition, global expansion opportunity, competitive positioning, and consistent history of shareholder returns.

Oppenheimer has an outperform rating on Costco stock with a price target of $1,050.

Price: 884.89, Change: -2.63, Percent Change: -0.30