Smith & Nephew (LON:SN.) has been upgraded to 'buy' from 'sell' by analysts at Citi, who expect a share buyback to begin next year.
Citi says it forecasts the medical device group to have a net cash position of around $500 million for the end of 2012.
"The company has stated that it is looking for acquisition targets but will return capital if it fails to find any.
"We believe that SN can do both, our calculations suggest that the company could buy back around$1.7bn of shares over the next four years and still raise $2.5bn of debt whilst maintaining an investment grade rating," it said it a note.
Citi has a new target price of 790 pence for the stock (current price: 679 pence).