Barclays Optimistic On Pace Of AIG's $2B Buyback Plan

In a report published Friday, Barclays analyst Jay Gelb raised the price target on American International Group (NYSE: AIG) from $56.00 to $64.00 following the company's announcement of a $2 billion buyback plan.

The $2B Buyback Plan

In a press release on Thursday, the American International Group announced that the Board of Directors “authorized the repurchase of additional shares of AIG Common Stock with an aggregate purchase price of up to $2.00 billion.”

The company has repurchases $418 million of shares of its common stock since the first quarter of 2014. The aggregate remaining repurchase authorization is roughly $2.12 billion.

Barclays Sees Increased Confidence In Buyback Pace

Gelb raised the price target by more than 14 percent on his increased confidence of the share buyback pace.

The analyst wrote, “We view AIG as well positioned to deploy capital in share buybacks over the next several years, although Fed oversight likely means AIG will take action at a measured pace. Buybacks would be meaningfully accretive to book value per share […]”

Barclays models $13 billion of share buybacks through 2016.

Gelb maintained 2014, 2015 and 2016 estimates of $4.40, $5.35 and $6.10, respectively.

Stock Action

Shares of the American International Group closed at $54.83 on Thursday.

The stock gained more than 1.1 percent by 10:00 a.m. ET before seeing some profit taking pulling shares down to $54.98.

The stock is currently trading at $55.26, up 0.78 percent.