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Dec. 2, 2021, 8:35 a.m. EST

Here’s where Citi strategists say a ‘buyback boom’ is coming

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By Steve Goldstein

Corporate profits are set to surge next year in Europe, and along with them a big jump in stock buybacks, according to strategists at Citi.

Strategists led by Beata Manthey expect a 60% jump in European company earnings per share, which will help drive a 30% gain in stock buybacks.

That’s not a typical use of cash by European companies, that are more likely than their U.S. peers to return cash in the form of dividends. In 2021, Citi estimates the typical company has spent 39 cents on every euro in dividends and 9 cents on dividends. (About 46% is spent on capital expenditure, and 14% on acquisitions.)

“The overall story is that dividends picked up sharply this year, but buybacks should rise most next. Our forecasts suggest the European dividend:buyback ratio will be 2.6 :1 in 2022, down from 3.3 :1 in 2021. But this is still very different to the US 0.7:1 dividend:buyback ratio,” said the analysts.

European stocks traded lower Thursday, as traders priced in the late-session swoon on Wall Street on Wednesday.

The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.22% fell 1.5% to 463.72.

Of the major regional indexes, the German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.59% declined 1.6%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.30% declined 1.3% and the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.72% fell 0.9%.

Vifor Pharma /zigman2/quotes/205554886/delayed CH:VIFN -0.56% jumped 19% after the Australian newspaper reported CSL /zigman2/quotes/206911412/delayed AU:CSL -0.36% is in exclusive talks to buy the Swiss company.

The food delivery sector took a beating, with shares of Deliveroo /zigman2/quotes/225812915/delayed UK:ROO +2.82% , Just Eat Takeaway.com /zigman2/quotes/201653805/delayed NL:TKWY +5.47% and Delivery Hero /zigman2/quotes/208380525/delayed XE:DHER +4.08% each retreating.

/zigman2/quotes/210599654/delayed
XX : STOXX
438.97
+5.30 +1.22%
Volume: 0.00
May 17, 2022 11:03p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
14,185.94
+221.56 +1.59%
Volume: 71,183
May 17, 2022 6:30p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,430.19
+82.42 +1.30%
Volume: 86,952
May 17, 2022 6:05p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,518.35
+53.55 +0.72%
Volume: 695,741
May 17, 2022 4:59p
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/zigman2/quotes/205554886/delayed
CH : Switzerland: SWX
CHF 178.00
-1.00 -0.56%
Volume: 189,917
May 17, 2022 5:30p
P/E Ratio
80.24
Dividend Yield
1.12%
Market Cap
CHF11.61 billion
Rev. per Employee
CHF711,066
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/zigman2/quotes/206911412/delayed
AU : Australia: Sydney
$ 273.09
-0.98 -0.36%
Volume: 634,236
May 18, 2022 4:10p
P/E Ratio
39.82
Dividend Yield
1.13%
Market Cap
$133.55 billion
Rev. per Employee
$564,123
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/zigman2/quotes/225812915/delayed
UK : U.K.: London
£ 96.34
+2.64 +2.82%
Volume: 3.33M
May 17, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
£1.74 billion
Rev. per Employee
N/A
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/zigman2/quotes/201653805/delayed
NL : Netherlands: Euronext Amsterdam
20.83
+1.08 +5.47%
Volume: 3.97M
May 17, 2022 5:39p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€4.25 billion
Rev. per Employee
N/A
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/zigman2/quotes/208380525/delayed
XE : Germany: Xetra
30.88
+1.21 +4.08%
Volume: 2.17M
May 17, 2022 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€7.45 billion
Rev. per Employee
€112,593
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