Nomura Instinet analyst Steven Chubak upgraded Cowen Inc.'s stock to "buy" on the appointment of Jeffrey Solomon as CEO and the company's increased buyback capacity.

He wrote that shares have underperformed lately due to fears over the Markets in Financial Instruments Directive in the European Union, outsized principal investment losses and the disappointment over an investment bid from CEFC China Energy Co. Ltd. failing to get regulatory approval.

But Solomon will seek greater accountability from management and bring a renewed focus on mitigating earnings volatility, Chubak wrote.

He was also encouraged by early reads on the EU directive and recent momentum at the broker-dealer, which he expects to persist as M&A and equity capital market backlogs continue to build.

Chubak also pointed to the board's move to increase the company's buyback capacity to $25 million and to the company's improved earnings outlook.

He put a target price of $16 on the shares. He expects EPS of $1.47 for 2018 and $2.10 in 2019.