The buyback represents a more aggressive strategy by Mr. George Buckley, CEO, to boost shareholder returns," added Kelly, who has a "neutral" rating on the stock.
Kelly estimated if the entire $7 billion were used to buy back stock at $75, it could add about 35 cents a share to 2008 earnings. He said the buyback was a significant increase from the $2.4 billion bought back by 3M last year.
Deutsche Bank analyst David Begleiter said in a research note that the "surprisingly large" stock buyback could add 30 cents a share, or 5%, to 2009 earnings. He reiterated his "buy" rating on the stock.
JP Morgan analyst Stephen Tusa, who has an "overweight" rating on the stock, said the buyback, in addition to being larger than expected, spans a shorter period of time than he had expected. The buyback represents about 13% of 3M's current outstanding shares at the current price.
3M, based in St. Paul, Minn., said on Monday that its board approved a $7 billion, two-year buyback program, the largest share repurchase plan in company history. It also boosted its quarterly dividend by 4.3% to 48 cents a share.