American left-hander Watson, seeking his first PGA Tour title since his breakthrough major win at the 2012 Masters, mixed four birdies with a lone bogey at the 10th for a 15-under total of 198.
Burly Kevin Stadler reeled off five birdies in the last six holes for a 67 to sit two strokes off the pace, one ahead of fellow Americans Harris English (69) and Ryan Moore (64) and Japan's Hideki Matsuyama (68).
(Reporting by Mark Lamport-Stokes in Los Angeles; Editing by Gene Cherry)
