The Gunners head into the game looking to secure three points after they had to fight back from two goals down to claim a 2-2 draw with Tottenham Hotspur at The Emirates before the international break.
Arsenal are currently in fifth place in the Premier League table after having taken seven points from their opening four games under Unai Emery this season.
The north London side won their first two games against Newcastle United and Burnley, before slipping to a 3-1 defeat by Liverpool FC, which was followed up by the 2-2 draw with Spurs.
Arsenal are now preparing for their trip to Vicarage Road on Sunday afternoon as they bid to make a return to winning ways.
And Nicholas is tipping the Gunners to claim all three points away from home and get their campaign back on track.
Writing in his column for Sky Sports, Nicholas said: “Watford will look to cause another upset and get off the mark.
“They like to get physical with Arsenal, so they may approach it this way again. With Quique Sanchez Flores coming in again, it will certainly boost the hosts. I liked him before, but he didn’t play overly aggressive. He played quite technically.
“How are Arsenal’s struggles at the back capable of competing with the physical side? The midfield and attack should be strong enough – if Alexandre Lacazette is fit we will be firing.”
Arsenal finished in fifth place in the Premier League table and without a trophy last season after they were beaten by Chelsea FC in the Europa League final.
MORE: Man United latest news
MORE: Arsenal latest news
MORE: Chelsea latest news
MORE: Liverpool latest news