UPDATE 1-Merrill Lynch ups BigBand Networks to buy

(Changes source, adds details, share movement)

July 10 (Reuters) - Merrill Lynch raised BigBand Networks Inc. BBND.O to "buy" from "neutral", saying the video processing company's stock offers an attractive entry point after declining about 36 percent from recent highs.

The brokerage highlighted BigBand's strong position with key customers in North America like Verizon Communications Inc. VZ.N and Time Warner Cable Inc. TWC.N among others, saying concerns regarding key customers were overblown.

Merrill, which has a price target of $17 on the stock, said BigBand holds a technology edge in the high-growth video market and has the potential to generate 30 percent annual revenue growth.

BigBand would benefit from growth in the number of users receiving tailor-made services, increasing demand for more video channels, especially HD channels, and investment in new applications by carriers, Merrill added.

The shares of the company were trading up more than 8 percent at $14.21 in morning trade on the Nasdaq. (Reporting by Shamik Paul in Bangalore)