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Shop Wal-Mart or Target Stock? Pro Picks

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Although both Wal-Mart Stores and Target delivered quarterly earnings that edged above estimates, one analyst sees a winner in aisle nine.

"Target has been a top pick here, and I would say that Wal-Mart is more or less in the middle," said Patrick McKeever, a senior equity analyst at MKM Partners. "I'm not super negative on Wal-Mart."

McKeever has a "buy" rating and a $74 price target on Target's shares.

During the quarter, Target's same-store sales rose 2.9 percent, helped by higher prices and customers' buying more items per transaction.

The number was nearly double the growth that Wal-Mart reported in same-store sales. Same-store sales at its U.S. locations rose 1.5 percent during the quarter, much lower than the 4.6-percent boost that analysts had forecast, according to Thomson Reuters estimates.

Following the Bentonville, Ark., retailer's release, its shares dove in trading, due mainly to the disappointing same-sales figures, McKeever said.

"I think it's largely that the stock was probably pricing in close to a 3-percent comp for Wal-Mart U.S.," he said. "I think that's really the main factor here."

McKeever has a "neutral" rating and a $72 price target on Wal-Mart's shares, and said the stock is "more or less fully valued at its current price."

On Thursday, Wal-Mart also acknowledged that it has expanded its own internal investigation into bribery accusations to the emerging markets Brazil, China, and India.

Despite the announcement, McKeever told CNBC's "Squawk on the Street" that the investigation is not having a big impact on the performance of Wal-Mart stock.

"I mean the stock has performed well in the face of these Mexico bribery allegations and this ongoing investigation," he said. "So I think the investment community has largely discounted that."

Instead, the dive stems from investors' concern about same-store sales figures, he said.

"This is all about sales and whether or not Wal-Mart can comp better than 1.5 to 2 percent, and right now, what we saw this morning seems to suggest that that will be the pattern still going forward," he said.

—By CNBC.com's Katie Little; Follow Her on Twitter @katie_little

Additional News: Retail Sales Fall 0.3%

Additional Views: Is Lousy Wal-Mart Forecast a Broad Sell Signal?______________________________

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Disclosures:

Patrick McKeever does not own shares of Wal-Mart or Apple.

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