We upgrade our recommendation on j2 Global Communications (JCOM) to Outperform. We believe j2 Global's strong financial position and diversified product pipeline, coupled with the future growth prospects of outsourced value-added messaging services, will drive its valuation levels higher in the near future.
The Subscriber Usage revenue continues to beat market expectations. This is an important parameter as credit-sensitive customers constitute a majority of the company's sales. Exploration of new opportunities for both digital facsimile and voice services, through continuous acquisitions, facilitated the company to solidify its market position.
j2 Global has achieved a huge reduction in its cancel rate in the last two quarters. Acquisition of Protus IP Solutions significantly boosted j2 Global's paid Dial in Demand numbers. Full-year 2011 financial outlook provided by management is also very strong.
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