Merrill Lynch resumed coverage of Noble Energy Inc. (NYSE: NBL) with a Buy rating and assigned a $49 price objective on Tuesday. While the shares closed at $31.09 on Monday, this reiterated call is for more than 50% in implied upside for investors. It may seem like a crazy upside call when you consider that traditional Dow or S&P 500 stocks typically are given 8% to 15% upside targets from analysts along with Buy ratings. That being said, the call does not look crazily aggressive if investors consider where Noble Energy shares have traded in the past year, as well as when compared to other very fresh competing analyst calls with similar upside projections.

Now, Noble is not exactly a tiny company that is unheard of. If that were the case, the upside in this call might seem less surprising. Noble has a $15 billion market cap.

Doug Leggate of Merrill Lynch noted that Noble’s recent sale of its Marcellus midstream assets looks fair, but he also noted that the sale now takes Noble’s total asset sales in 2017 to almost $2 billion, roughly twice of the sales that Noble’s management had targeted.

Leggate said about the Marcellus assets sale on May 2, 2017:

Based on our discussions with our MLP team we view the transaction price as fair when adjusted for the publicly traded unit value, which at the current price represents approximately $465 million of the sale value. This leaves an implied value of approximately $300 million for Noble’s 50% interest in CONE Gathering.

Another reason noted for the $49 price objective is that Noble is now perceived as “catalyst rich heading into 2018.” The firm believes that the post-sanction Leviathan’s value is tangible, with an expected start up by the end of 2019. It is also funded by the expected sell down of Tamar. The beloved Permian Basin was also talked up for Noble Energy. Leggate’s report from Tuesday said:

We also anticipate that Noble raises 2018 Permian targets given recent Wolfcamp A results are trending 35% above its 1.2 MMboe type curve – with options for additional midstream drop downs to its MLP NBLX and a possible farm down of its interest in Leviathan. While the stock has come under recent pressure due the tragic events in Colorado, we view market concerns as overdone given a chronology of events that we do not expect to reopen setback rules.

Merrill Lynch’s investment rationale pretty much sums up yet one last look for upside ahead. It said:

Noble Energy is one of the strongest top line growth trajectories in the sector balanced between short cycle and long cycle growth and where we view recent concerns over Colorado development as overdone.

Three other fresh analyst calls from May 18 have been noted below:

• UBS reiterated its Buy rating and $47 target, noting that Noble has materially exceeded its 2017 divestiture target and raised its net asset value to $62 per share.
• Piper Jaffray reiterated its Overweight rating with a $47 price target, noting that the sale will allow it further strengthen its balance sheet via debt reduction or to redeploy capital while potentially accelerating activity to pull forward shareholder value.
• Cowen reiterated its Outperform rating and $45 target and kept Noble as a top pick, noting that the NTSB investigation into the Colorado explosion ultimately will not result in any material changes to its mainly rural DJ position.

While this was a resumption of coverage after a recent sale, Noble Energy shares were up just 3-cents at $31.12 early on Tuesday. Noble Energy has a 52-week range of $29.39 to $42.03 and it has a consensus analyst price target from Thomson Reuters of $45.53. This stock was above $70 briefly during parts of 2013 and 2014.

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