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Wal-Mart earnings: 3 key things to watch

Wal-mart earnings edge: 3 key things to watch

While big name tech companies have largely finished reporting results for the quarter, there are still plenty of exciting earnings to come. This week, retail takes center stage as names like Home Depot, Staples and Target all get set to give results. One name that will be closely watched is Wal-Mart, the retail behemoth which has seen its stock come under some pressure in recent months.

Shares of Wal-Mart have dropped more than 15 percent so far in 2015, underperforming the broader retail sector and competitors including Target. But according to JPMorgan managing director Chris Horvers, Wal-Mart could be set up for a pop when it reports earnings on Tuesday before the bell.

Horvers currently has a "neutral" rating a $77 price target on the stock. According to data from Thomson Reuters, the average target among analysts who cover the stock is $79.95.

On CNBC's "Fast Money," Horvers outlined the three key things he will watch in the company's earnings report.

First, Horvers pegged the all-important comps figure at 1 percent for Wal-Mart U.S., saying he would be "very focused on Wal-Mart's ability to run better sales trends against more difficult comparisons."

Next, Horvers said he would focus on margins for the quarter. According to Horvers, margins are under pressure from both wage increases and e-commerce investments.

In a research note published ahead of earnings, Horvers wrote that because of those two factors, "margins will remain under duress through the first half of next year," and "the release and call will be scrutinized for clarity."

Finally, Horvers said Wal-Mart's full year earnings per share guidance will be critical in determining which direction the stock could move after the report.

"Wal-Mart's guiding $4.70-$5.05 this year," he said, adding that Wall Street is "already down at the low end at $4.76."

But according to Horvers, Wal-Mart's guidance could actually surprise some investors. "We think it ends up being a better than feared outcome," he said, "so we would be long the stock into the print."

By CNBC's Michael Newberg