RESEARCH TRIANGLE PARK — Vik Grover, a telecom analyst with Kaufman Bros. in New York, sees plenty of upside in the merger of ITC DeltaCom and BTI.

In a point overlooked by many, ITC DeltaCom can move a lot of its traffic to BTI’s extensive fiber backbone, Grover says in a research note on the deal. He also forecasts better leveraging power in negotiating for access to networks with rivals such as BellSouth in addition to huge cost savings as predicted by the companies. And due in part to BTI’s own infrastructure, which stretches from New York to Miami and points west, he sees more wholesale opportunities for bandwidth and service deals.

Grover “sees substantial upside” for the merged company, citing reasons such as “greater scope and scale”, “superior market penetration: and “the low purchase price” of BTI. (The deal included $112 million in debt carried by the Raleigh-based company.) Welsh Carson, the investment firm that owned virtually all of BTI and a huge chunk of ITC DeltaCom, agreed to put another $35 million into the joint venture.

As a result, Grover reiterated his “buy” rating on ITC stock (Nasdaq: ITCD) but raised the target price more than 50 percent to $8, up from $5.

Grover labels the merger price of $132 million as “an attractive price.” He sees $40 million to $60 million a year in cost savings for the combined venture alone.

“For example, ITC DeltaCom will likely be able to move traffic from resale/leased circuits from FPL Group (parent of Florida Power) and Duke in Florida and the Carolinas to BTI’s fiber network in those regions,” Grover writes. “Further, we believe there are opportunities to eliminate duplicate (general and administrative) personnel and underperforming sales teams as well as better leverage the combined companies’ centralized provisioning interface/systems with BellSouth.”

Grover pays close attention to sales efforts. In a recent chat with the analyst, Grover had high praise for the sales team put together by US LEC.

Looking to next year, Grover sees the combined venture generating $682.5 million in revenue and 25 cents earnings per share.

A ‘Buy’ for Cisco

Cisco Systems (Nasdaq: CSCO) stock got an endorsement from Buckingham Research last week. The firm upgraded Cisco to “strong buy” from “accumulate.”

Cree suits don’t scare one analyst

The Eric Hunter law suit against Cree (Nasdaq: CREE) and his brother, Neal, and the — count ’em — at least 11 class action suits added on have driven down the company’s stock more than 20 percent. But not everyone is panicking.

Just before the 4th, Adams Harkness reitered its “buy” recommendation on Cree. The target price remains $25. Cree closed at north of $16 on Thursday.

In a note, Adams Harkness said “as the dust settles the overhang will be removed and Cree’s valuation will rise.” On the sales from the firm said it “thinks the company is seeing good demand for its LED products –“

Rick Smith is managing editor of Local Tech Wire.