UPDATE: UBS Upgrades Marathon Oil (MRO) to Buy

(Updated - June 25, 2015 9:01 AM EDT)

UBS upgraded Marathon Oil (NYSE: MRO) from Neutral to Buy with a price target of $32. Analyst William A. Featherston called the stock an inexpensive way to play rising oil prices.

Featherston explained, "MRO's high oil exposure, above average debt-adjusted growth, leverage to low-cost resource in the Eagle Ford and SCOOP/STACK, strong balance sheet and inexpensive valuation vs. peers make it, in our view, an attractive vehicle to play our expectations for a recovery in longer-term oil prices."

"While all of our large-cap E&Ps are trading above historical average EV/DACF multiples, MRO is at a wider than normal discount to peers despite an above average cash flow per debt-adjusted share growth outlook. Moreover, under the UBS price deck, MRO trades at just ~0.57x 2P NAV, well below the peer average of ~0.74x. And given MRO's high liquids exposure (~70% of 2016E prod'n vs. peers' ~60%), its 2016E DACF multiple compresses at a more material relative rate in an oil price recovery, leaving it trading at 5.4x (vs. peers' 7.2x) assuming oil prices rise to ~$75/Bbl," added the analyst.

For an analyst ratings summary and ratings history on Marathon Oil click here. For more ratings news on Marathon Oil click here.

Shares of Marathon Oil closed at $26.61 yesterday.

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