Oppenheimer rating changes in the semiconductor space may provide a pair trade setup. Marvell Technology MRVL was downgraded from market perform to underperform and Broadcom BRCM was upgraded from market perform to outperform.
Weak margins are the main reason for the downgrade of Marvell. Analyst Rick Schafer says that the company is giving up its margins to boost revenue growth while several units lag the industry averages.
Related: Oppenheimer Upgrades Broadcom to Outperform
Schafer thinks Broadcom will grow its business by at least mid single digits in 2014. This estimate comes shortly after Broadcom announced that it would be exiting its baseband business.
Traders have picked up on the pair trade opportunity and shares are responding. Marvell was last trading down 2.5 percent while Broadcom shares have gained 1.2 percent.
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