Down 45% over the past 52 weeks, Marathon Oil (NYSE:MRO) stock hasn't delivered any sort of good news to its shareholders in a very long time -- but times, they are a-changing.

This morning, two separate analysts announced they are upgrading Marathon Oil stock to overweight, and assigning price targets as high as $21 (according to an update from TheFly.com). A third analyst, UBS, which had already rated the stock a buy, raised its price target to $17 per share, from a previous projection of $16.

What's got all these analysts so excited about Marathon Oil stock? Read on to find out.

Oil Derricks
Has the sun set for good on high oil prices? Marathon Oil stock owners can only hope it has not. Image source: Getty Images.

Thing No. 1: All of a sudden, everyone loves Marathon

UBS loves Marathon, and has for some time (which hasn't prevented the stock from losing nearly half its market cap over the past year). Today, however, Capital One announced it is also in favor of the stock, upgrading to overweight, and Morgan Stanley clambered aboard the buy train as well, raising its price target from $18 to $21 a share.

Thing No. 2: Striking it rich in the oil patch

All three analysts seem to be keying off the same event in upgrading Marathon Oil shares. Here's how StreetInsider.com summarized UBS' announcement today: "MRO agreed to purchase privately held PayRock Energy for $888MM." UBS sees the deal as attractive because "PayRock has ~61,000 net surface acres & current production of" 9 million barrels of oil equivalent per day.

That's a lot of oil.

Thing No. 3: A steal of a deal

What really gets the analysts excited about this deal, though, is the price that Marathon Oil is paying. $888 million, although it sounds like a lot of money, is barely half the price that Bloomberg mentioned as a possible bid target back in May. It's even cheaper than the $1 billion that UBS was thinking might be the final purchase price.

Providing further context for the deal, UBS notes that Marathon is paying an "implied acreage value of $11,800/acre [which] is well below the ~$20,000/acre" that Devon Energy (NYSE:DVN) paid to acquire similar assets from Felix Energy LLC back in December. (Good news for Marathon, even if it sets Devon shareholders to banging their heads against walls.) So once again, on the surface at least, it looks like Marathon picked up some valuable assets for mere pennies on the dollar of their intrinsic value.

The deal is so cheap, in fact, that Marathon says it can buy the assets out of its own cash reserves, which at last report exceeded $2 billion. And it's happy to do so, calling PayRock Energy's oil possessions "high margin" and "high quality inventory [that] will meaningfully expand the quality and scale of Marathon Oil's existing portfolio in one of the best unconventional oil plays in the U.S."

The most important thing: Valuation

That Marathon is getting a steal of a deal in PayRock does not seem to be in dispute. Everyone on Wall Street agrees that Marathon has struck gold with this acquisition. But will investors who follow the analysts' advice, and buy Marathon Oil stock today, and similarly strike it rich?

That's a much tougher call.

Granted, oil prices are on the rise, closing on the $50 mark again today, and having approached a recent high of $52 per barrel earlier this month. On the other hand, these higher prices haven't helped out Marathon much. The stock hasn't been profitable in more than a year, and Marathon has burned through more than $1.1 billion in negative free cash flow over the past 12 months.

What's more, even if oil prices do keep going up, that won't necessarily pull Marathon Oil out of the tar pit. It took oil prices in the low $100s to keep Marathon Oil free cash flow-positive in 2013 and 2014. Any price much below $100, however (as seen, for example, in 2013, and again in 2015) quickly destroyed the company's ability to produce positive cash profits from its business.

Long story short? The analysts are probably right about PayRock being a net positive for Marathon Oil stock. But the big picture remains the same: Unless oil prices recover, and indeed surge into the triple digits again -- and stay there -- it's going to be a very long race, and a hard one for Marathon to win.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he currently ranks No. 288 out of more than 75,000 rated members.

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