Newcastle, who are bidding to lift the Senior Cup for a 38th time, travel to Craik Park (kick-off 7.30pm GMT) to face the Highwaymen, who are members of Northern Premier League Division One East - the fourth tier of non-league football.
United turn their attention to cup action following a 1-0 away win against their Fulham counterparts in Premier League 2 - their fourth successive league win - on Friday.
Walters highlighted the Magpies' Checkatrade Trophy run, which saw Newcastle's second string beat four Football League opponents on their passage to the last 16 before their impressive run was ended by Sunderland - as they prepare to face a more experienced Morpeth side.
"We know that will be going up against a big, physical team in Morpeth," Walters told nufc.co.uk. "It's going to be a challenge as we are a young side and will be going up against big, strong men, but it should be a good one for the group.
"We had a similar test against Sunderland, playing against senior League One opposition who were big and strong. That experience of playing in the Checkatrade Trophy this season against Football League teams should be helpful for us."
Walters - who, along with most of his team-mates, hails from Tyneside - will attempt to get another appearance at St. James' Park under his belt, with Northern League outfit North Shields awaiting the winner of the last-four clash in the Northumberland Senior Cup final.
The 18-year-old left-back has played a strong role in United's defensive form, with the Magpies achieving three clean sheets in their last four matches, and the youngster admitted that hard work in training has been paying off in recent weeks.
"It is always great to play at St. James' Park," Walters added. "We played there in the Checkatrade Trophy and we managed to win on penalties (against Macclesfield Town). It was a great night for everyone involved and it's a good stadium to play at in front of crowds that we aren't always used to at under-23 level.
"When I was younger, I used to go to many home matches and once you step out on the pitch it's a great feeling, even when it's not full of fans like it is for Premier League games.
"During the first half of the season, we didn't keep too many clean sheets so we've all been working really hard and focusing on stopping teams from scoring. Keeping three clean sheets in the last four games has been a reward for all the work we've been putting in and it gives us a great chance to win and pick up more wins and points."
The under-23s squad defeated Morpeth in last year's finale, defeating the Highwaymen 3-1, and Walters - who signed a first professional contract with the club in July - thinks that the young side are more than capable of retaining their title and capping their season with silverware.
"At the start of the season, we wanted to get as far as possible in the Checkatrade Trophy. We managed to qualify from the group and to get even further was great. We are wanting to get promotion, which we are in good shape for at the moment, and are targeted to win the Senior Cup. Getting into the final and winning the competition is what we want to do but we can't be looking ahead just yet and and need take a game-by-game approach.
"There are a few lads who have won the cup before but this year we have quite a young team and not many of us played in the tournament last year. However, there are older lads who have had that experience which will be useful for the group."
