The firm placed a $24 price target on the company, representing 24% potential upside from the stock's closing price on Friday.
KeyBanc sees the El Dorado, Ark., oil company as a defensive investment due to its low valuation since energy is currently out of favor with investors.
The firm also cites the company's 5.2% dividend yield as a bullish indicator.
The base-case scenario for Murphy assumes a 2020 West Texas crude oil price of $56 a barrel and a Brent crude price of $67 per barrel. West Texas crude prices were trading at $58 per barrel while Brent crude prices were at $62.70 per barrel on Monday.
Murphy Oil shares were up 6.3% to $20.60 Monday. In the past year, the stock has traded near $17 two weeks ago and as high as $36.53 last October.