What happened

A research report from analyst firm Morgan Stanley moved two consumer electronics specialists in opposite directions on Thursday. Analyst Erik Woodring recommended a so-called pair trade, where investors should build their positions in smart-speaker maker Sonos (NASDAQ:SONO) while moving away from mobile camera specialist GoPro (NASDAQ:GPRO). Sonos stock rose as much as 12.4% as a result, while GoPro's shares fell as much as 10.1%.

One businessman stands morose on a red arrow pointing downward while a happier man skates higher on a green arrow.

Image source: Getty Images.

So what

Woodring reiterated his overweight rating of Sonos and raised his price target from $13 to $19 per share. He also maintained an underweight rating on GoPro and held the target price in place at $2.50 per share. The analyst said that GoPro has been an overachiever since the market bottom in March, while Sonos largely followed the broader market trajectory and thus ended up undervalued in comparison to GoPro.

Now what

It's important to note that GoPro's mobile cameras are targeted at a demographic with an active lifestyle, while Sonos caters to more-sedentary home entertainment needs. The stay-at-home policies in the COVID-19 era should boost Sonos but limit GoPro's business opportunities. Woodring's argument makes a lot of sense in this light, given these counterintuitive rebounds since March 16:

SONO Chart

SONO data by YCharts.

Investors who participated in GoPro's market-beating gains and Sonos' milder rebound are betting on a quick return to normal life where GoPro cameras might be in high demand and the home-speaker market loses steam. Morgan Stanley's pair trade of these tech stocks looks like an effective hedge in case the coronavirus-based market trends are here to stay.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.