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This retailer could be the next stock to fall victim to Amazon’s rise

Home improvement retailer Lowe's is set to release its quarterly earnings Wednesday before the market opens, and some will be watching specifically for any evidence of Amazon's impact on the chain.

The company's earnings are of particular importance to Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, as he views it as a gauge of housing market demand, as well as the broader retail sector.

Lowe's management may reveal that Amazon's e-commerce convenience has negatively impacted its business, Schlossberg said, as it was perceived to have done to competitor Home Depot earlier this month.

"Amazon doesn't have to copy a lot of Lowe's inventory to be able to steal away some of the low-lying fruit, by simply allowing people to order many of these items online versus in-store. So Wall Street is going to be watching very carefully to see what kind of forward guidance Lowe's management gives, and whether they are going to admit or acknowledge any type of bleeding effect from Amazon that Home Depot … also sort of alluded to in their call earlier" this year, Schlossberg said Tuesday on CNBC's "Trading Nation."

Indeed, last week shares of Home Depot fell 3 percent, even as its quarterly earnings beat analysts' estimates, amid fears that company would suffer further from competition from Amazon.

"Amazon does not have to really compete on [a] full catalog basis with Lowe's. They can sell lamps, and furnishings, and all of the fixtures at a much lower cost, with much easier delivery method, and that could really impact Lowe's bottom line very harshly," Schlossberg pointed out.

Analysts seem to be arguing, he said, that if there is a dip in the stock after its earnings report Wednesday, that it would present an attractive buying opportunity because "Lowe's has generally been a good dividend payer, and is more or less a good quality business."

But Schlossberg is more cautious, because if retail stocks are in the midst of a more "secular decline," it's more than just the immediate part of Lowe's business, and "we could be seeing a much longer-term downward bleed in Lowe's, and I would be much more cautious in picking my spots as to where I want to come in on the price."

On a grander scale, Schlossberg said the larger question surrounding the business is not so much to do with its own business but rather whether can Lowe's "fend off" outside forces like the potential for rising interest rates giving way to slowing demand in the housing market, in addition to Amazon's threat.

In a bullish note to clients published last week, BTIG analysts Alan Rifkin and Marvin Fong wrote that they expect earnings per share to beat expectations, reiterating their buy rating and bullish $95 per share price target (implying more than 25 percent upside for the now-$75.82 stock).

They wrote that concerns around the company's ability to compete with Amazon wading into the appliance market, as was announced earlier this summer, are "overblown."

"While Amazon is never to be taken lightly, we believe Lowe's has a significantly more robust product lineup in terms of breadth of top brands and selection within brands," they wrote.

Analysts are largely expecting earnings of $1.62 per share, according to FactSet data.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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