NEW YORK (TheStreet) -- Shares of Juniper (JNPR) , which provides network infrastructure products, are sinking after the company abruptly announced last night that it had chosen a new CEO. However, several analysts were upbeat on the company's decision for its new CEO.
WHAT'S NEW: Juniper last night announced that its CEO, Shaygan Kheradpir, had resigned, effective immediately. The company said the CEO's resignation came in the wake of the board's review of his leadership and of his conduct during talks with a customer. Named as Kheradpir's replacement, effective immediately, was Rami Rahim, who had been serving as the executive VP and general manager of Juniper's Development and Innovation division.
ANALYST REACTION: Nomura analyst Stuart Jeffrey reacted to the news by upgrading his rating on Juniper to Buy from Neutral. Jeffrey wrote that he had previously been worried that the risk facing the company was increasing, and had little confidence that its leadership team could meet its long-term targets. With Rahim at the helm, however, the company has a better chance of generating revenue growth, Jeffrey contended. Unlike his predecessor, Rahim is a Juniper veteran, has demonstrated strong expertise in the company's business during numerous presentations to investors, and has been instrumental in developing products, according to Jeffrey. The analyst raised his price target on the stock to $25 from $19.50. Janney Capital also said the CEO transition at Juniper was unexpected, but that Rami Rahim should have a fairly smooth transition since he has been a big part of creating and implementing the strategy to which the company affirmed its commitment. Janney maintained its Buy rating and $28 fair value estimate on shares of Juniper. Wells Fargo was fairly upbeat on the company's decision. Although Juniper's second CEO change in less than a year is a negative headline, Rahim is a strong choice, as he is highly respected within the organization and has played an integral role in developing the company's current strategy, according to the firm. Moreover, Rahim maintains close relationships with many of Juniper top customers, Wells Fargo reported. As a result, the change will be less disruptive than feared, according to Wells, which noted that Juniper said there would not be any changes in its strategy going forward. The firm kept an Outperform rating on the stock.
PRICE ACTION: In mid-morning trading, Juniper fell 4.3% to $20.57.
Reporting by Larry Ramer.