Wall Street's favorite discount retail stock is pretty clear. 

Shares of Target (TGT) have nosedived about 22% so far this year compared to a 16% gain for Walmart (WMT) .

Investment firm Cowen and Co. contended recently that Walmart's stock continues to be the better pick over its counterpart Target.

Source: Bloomberg.
Source: Bloomberg.

Target's earnings pre-announcement, which forecast better same-store-sales and a boost in traffic, combined with continued momentum from Walmart will provide investors with a confidence boost regarding second quarter results, Cowen analyst Oliver Chen noted.

But, his proprietary survey shows cautious trends in the quarter, including declines in visitor rates, drops in satisfaction, and an uptick in visitor overlap with Amazon.com (AMZN) .

Chen acknowledges that Target has taken effective steps to spark its turnaround, but still prefers Walmart. He maintains his "Outperform" rating on Walmart's stock with an $86 price target. Conversely, Chen has a "Market Perform" rating on shares of Target.

Both Target and Walmart will report second quarter results later this week. 

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