We upgrade our recommendation for j2 Global Communications (JCOM) to Outperform. According to our view, the company’s strong financial position and diversified product pipeline, in synergy with the long-term growth prospects for outsourced value-added messaging services, will drive valuation levels higher in the near future.

Subscriber usage revenue continues to beat market expectations. This is an important parameter as credit-sensitive customers constitute a majority of j2 Global’s sales. Exploration of new opportunities for both digital fax and voice services, through continuous acquisitions, facilitated the company to solidify its market position within the industry.

The company achieved huge reduction in cancel rate in the last quarter. Acquisition of Protus IP Solutions has significantly boosted j2 Global’s paid Dial-in-Demand numbers. Recently, the company has raised its future financial outlook.
 
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