AMP Limited (ASX: AMP) shares rallied on Tuesday trading up 3.5% after the stock was upgraded to outperform from neutral at Credit Suisse, despite the stock underperforming the market by 10% since its first half 2017 results announcement.
In August, AMP announced a capital intensive growth strategy to buyback shares and pursue global growth plans for AMP Capital. After returning $200 million of the initially planned $500 million to shareholders, the financial services giant decided to pause the buyback.
Credit Suisse analysts report that the stock has experienced a price to earnings ratio contraction, most likely due to the pause in the buyback.
Backing Credit Suisse's upgrade are two reinsurance deals made public in August , which will free up $500 million in capital by the end of 2017 in a bid to overcome its persistent life insurance underperformance problems.
