B.Riley/FBR analyst Thomas Curran is out defending Energy Recovery (NASDAQ: ERII) amid weakness following the CEO change.

Curran said they caught up with management who (1) emphasized that Gay resigned "entirely for personal reasons", and (2) intimated that those reasons have nothing to do with ERII's fundamentals and that the company IS NOT about to disclose any related material surprises.

"We believe this transition at the helm will prove a net positive. Gay had sustained significant reputation damage due to how he managed the VorTeq initiative -- more as a result of how he communicated around setbacks and delays, rather than due to those disappointments themselves -- and had recently come under so much investor criticism that his "credibility question" was becoming a distracting negative. Ultimately, our focus has been and remains on the core Water business's upcycle performance and earnings potential, and the oil & gas division's promising technologies and empirical evidence of their continued progression towards commercialization. Given both, we believe ERII offers compelling risk-reward and are aggressive buyers on this sell-off. We look for Gannon to reassure and establish a new tone with ERII's 4Q release (3/7 after the close) and call (3/8 at 10AM ET) next week."

The firm maintained a Buy rating and price target of $20.00

For an analyst ratings summary and ratings history on Energy Recovery click here. For more ratings news on Energy Recovery click here.

Shares of Energy Recovery closed at $7.68 yesterday.