Story of the game
The home side came closest at the beginning as Etienne Capoue's shot from close range was well saved by the England international Jordan Pickford.
The only other real chance of the first half was seen through some sloppy play from Watford, allowing Cenk Tosun to have his shot well saved by the in-form Ben Foster.
The second half immediately opened livelier, as the Toffees hit the top of the crossbar following Gylfi Sigurdsson's flick.
Gray had come on for Ken Sema at the opening of the restart, and proved to be the difference. In the 65th minute, Will Hughes took the ball on the right after a very smart flick-on from Craig Cathcart and used his strong vision to pick out the Hornets' striker who couldn't miss.
The home side didn't threaten again and the away side failed to threaten enough for the remaining 25 minutes. Lucas Digne hit the woodwork again with a free-kick in the 83rd minute, whilst Tosun placed his free header off target inside stoppage time.
Both clubs remain where they were at the start of the afternoon, with Everton in 9th and Watford in 8th, however there is now a 4 point gap between the two sides.
Takeaways from the match
Marco Silva is under a lot of pressure
It's fair to say that the performance from his side today didn't exactly help that, either. Marco Silva's side have taken 6 defeats from 8 since the Toffee's 5-1 thrashing of Burnley at Turf Moor on Boxing Day. His side looked weary today and barely threatened at all. Furthermore, whilst Tom Davies looked like Everton's only spark in the first half, questions will be asked over his position; at points in the first half he was playing the furthest forward, and in the second he was one of the deepest. Silva's tactics were confusing at times today, and he needs to change something up soon.
Andre Gray was the difference for the Hornets
Watford had looked flat and sloppy in the first half, misplacing many a pass. Javi Gracia made the tactical decision to bring on Gray for the struggling Sema, placing the striker up top alongside Troy Deeney and putting former Toffee Gerard Deulofeu on the wing in Sema's place. Immediately in the second-half, Watford had more of a buzz. Gray's added pace put pressure on the Everton back-line and the communication between himself, Deeney, Will Hughes and Deulofeu became more apparent. The goal was deserved, and a start will also be deserved in Watford's next league match, or even in the FA Cup Round 5, away at QPR.
This time last season, most Watford fans would have been thinking one thing - sign a new left-back in summer and get Jose Holebas out of the club. A year later, however, the Greek has been showing what a good move it was keeping him. Holebas provided a great showing this afternoon both offensively and defensively. Once he was in front of the Rookery Stand, his corners were much improved on what they have been previously; whilst defensively he never shied away from making a challenge. A superb performance, and one of Watford's stand-out players this entire season.
The in-demand Watford midfielder had found himself out of action for a month after his side's 2-1 victory at Selhurst Park, and has come back into the side and immediately shown exactly what he brings to the football club. A winless period in the league ensued with Doucoure's absence, and it's the little things that really showed this afternoon - clever little passes, important interceptions, and his runs all over the field. He may be in-demand from many clubs, but it is very important that the club kept him during the January transfer window. A key player for the Hornets.
Watford will make the short trip to west London for their FA Cup Round 5 match at Loftus Road on Friday, where they take on Championship side Queens Park Rangers for a place in the draw for the Quarter-Finals. After that, it's another Friday night kick-off as the Hornets continue their travels away from home to Wales, where they will face Cardiff City. Gracia will be hoping that the Hornets can continue their good form in the league - which has seen just one loss since Watford's narrow defeat at the hands of Chelsea on Boxing Day. He will also be hoping for the Hertfordshire-based side to continue their cup run; making the push for a place at Wembley in 2 rounds' time.
The Merseyside team have a hefty two-and-a-half week break before they play their next game; also travelling to Cardiff. Silva will be ready for a break following Everton's dreadful form in recent weeks, although you have to wonder if he will be expecting to last this period with the club in the first place.