SunTrust Calls Twitter's New CFO Appointment "Surprising"

In a report published Monday, SunTrust analyst Robert Peck gave some quick thoughts on the "surprising" change of the

Chief Financial Officer.

In an

on July 1, the company announced that former Goldman Sachs banker Anthony Noto will replace the current CFO Mike Gupta. Gupta will remain with the company as Senior Vice President of Strategic investment. Noto and Gupta will assume their new roles within the next 30 days. Anthony Noto signed a contract with the social media and networking company on June 30,2014. His annual salary will be $250,000 and will receive a one-time stock award of 1,500,000 shares of Twitter (approximately $60 million). Noto also has the right to one-time option grant to purchase 500,000 shares "at an exercise price equal to the closing price of Twitter common stock on the date of grant and vesting over 4 years as described in the Offer Letter and subject to the terms of the Company's 2013 Equity Incentive Plan."

SunTrust, who holds a Buy rating on Twitter, remarked that Mr. Noto's career path change is understandable given the attraction of taking Twitter to the next level. Peck commented that the new CFO appointment is surprising for several reasons. "1) we believe the Street has looked favorably on Mr Gupta's tenure as CFO, as estimates have been continually revised upward; 2) the recent concerns around the speed of the company's product innovation and rollout was not under Mr Gupta; 3) we think it's unlikely Mr. Gupta would stay longer-term in a non-CSuite role; 4) although Mr. Noto is widely respected across the industry and is a veteran, he has no public CFO experience (he was previously CFO of the NFL, a private organization)."

Shares of Twitter closed at $42.05 on Tuesday. The stock gained 1.31 percent to $42.60 in Wednesday's premarket trading.