AMP shares charge higher on Monday despite market selloff: What's going on?

AMP Ltd (ASX: AMP) shares are starting the week with a bang.

In early trade on Monday, the financial services company's shares are up 4% to $1.30.

This compares favourably to the S&P/ASX 200 Index (ASX: XJO), which is having a tough start to the week following a selloff on Wall Street on Friday.

The benchmark index is currently down 1.4%.

Why are AMP shares outperforming?

AMP shares are outperforming on Monday after the company sneaked out a positive announcement after the market close on Friday.

That announcement revealed that the company will undertake an on-market share buyback of up to $150 million of ordinary AMP shares.

According to the release, the relevant regulatory approvals have been granted for the buyback, which is expected to commence following release of AMP's first quarter update. That is scheduled to be released to the market next month on 16 April.

AMP notes that the buyback will not exceed 10% of issued capital over a 12-month period. As a result, shareholder approval is not necessary.

AMP's chief executive, Alexis George, revealed that the decision to return this capital to shareholders was due to the absence of a compelling alternative. She believes it is the most efficient use of capital. George said:

We remain committed to returning surplus capital to shareholders in the absence of a compelling alternative, and prioritising organic growth in our wealth businesses. Today's announcement demonstrates this, with an on-market share buyback the most efficient use of capital at this time.

Given that AMP shares are down heavily from their highs, it is hard to argue against this being a good use of capital.

Should you invest?

Analysts are largely very bullish on AMP shares at current levels.

According to a note out of Ord Minnett from last week, it has put a buy rating and $1.65 price target on its shares.

Elsewhere, Morgans Stanley has an overweight rating and loftier $1.90 price target on them.

Macquarie and Citi are bullish with an outperform rating and buy rating together with $1.80 price targets.

Finally, UBS is also positive on AMP and has a buy rating and $1.75 price target on its shares.

All in all, the broker community appears convinced that its shares will be heading meaningfully higher over the next 12 months.