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Marathon Oil will surge 41 percent, Bank of America says

The Marathon Petroleum Corp. Galveston Bay refinery stands in Texas City, Texas.
F. Carter Smith | Bloomberg | Getty Images

Investors should buy Marathon Oil on the prospect of energy-production growth next year, according to Bank of America Merrill Lynch, which upgraded the shares of the company to buy from neutral.

"Marathon Oil remains one of the most oil levered of the large cap US oils," analyst Doug Leggate wrote in a note to clients Tuesday.

"With the addition of the STACK that likely dominates incremental drilling activity starting in 2H16 we believe management can resume growth in oil and gas production in 2017."

The emerging shale region of Oklahoma is called STACK (Sooner Trend Anadarko [basin] Canadian and Kingfisher [counties]).

Leggate raised his Marathon Oil price target to $21 from $20, representing 41 percent upside from Monday's close.