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Sprint Nextel Corp. (NYSE: S) is closing on its acquisition of Clearwire on Tuesday, and the company is still becoming a part of Softbank. Some investors may only consider Sprint a tracking stock going forward, but one Wall Street firm thinks that the remaining shares of the combined three-way merger will bring value investors positive gains. Cowen & Co. upgraded Sprint Nextel to Outperform from Market Perform and it assigned an $8.00 share price target for the stock.

Current Sprint Nextel holders actually will own about 30% of the NewCo Softbank-Sprint-Clearwire entity. That puts Sprint as a foreign-owned wireless player in the United States, and it will be classified as a controlled entity under New York Stock Exchange rules.

What makes Tuesday’s upgrade stand out is that there is a pretty fresh read from the Motley Fool showing how only 3% of the outstanding shares have elected to receive NewCo Sprint shares, and half of the holders did not even bother to vote at all. The Fool even hinted that “it’s unlikely that investors simply didn’t know it was happening.”

The Fool stated:

The deal is subject to proration, and there’s simply not enough cash to go around to pay out all the shareholders that prefer cold, hard dollars. The total cash consideration is $16.6 billion. That means that everyone who elected for shares of “New Sprint” will get exactly that, but all the investors that opted for cash (either actively or passively by not electing anything) will get a combination of cash and stock. The company estimates that these amounts will be approximately $5.65 per share and 0.26 shares of “New Sprint.”

So, what does Cowen & Co. really see here? An $8 price target implies upside of 13.1% from the $7.07 close on Monday. The consensus price target from Thomson Reuters is only $7.29. The upgrade’s main thrust is on margin expansion based on Softbank synergies. Even the free cash flows (FCF) are expected to rise in 2015 (only a year and half away now). The FCF may grow at a compounded rate of 50% in the years ahead.

Upside of 13% is high for telecoms these days. Sprint pays no dividend, versus the 5% yield for AT&T Inc. (NYSE: T) and 4% yield for Verizon Communications Inc. (NYSE: VZ). The consensus analyst price target of $37.69 for AT&T implies upside of only about 5.7%. Verizon’s consensus price target of $54.46 implies only 6.5% upside from current share prices. So while Sprint has no dividend, its implied upside is much more, according to Cowen, when compared to a consensus average of all analysts for both AT&T and Verizon.

Sprint shares have traded in a range of $3.15 to $7.50 over the past year. If Cowen’s $8 target is reached, that would be the first time since September 2008 that the stock was trading at $8.00 or higher.

We would point out that Standard & Poor’s also lowered Softbank’s corporate credit rating on Monday to BB+ and that is now junk bond territory for Softbank, based on the leverage. Here is a summary of some of the recent analyst calls on Sprint Nextel:

• Downgraded to Hold at Argus (6/20)
• Downgraded to Neutral at Macquarie (6/19)
• Downgraded to Neutral at Nomura (6/07)
• Started as Outperform at BMO Capital Markets (5/30)
• Downgraded to Hold at S&P Capital IQ (4/24)