We initiate coverage for j2 Global Communications, Inc. (JCOM), a worldwide provider of outsourced, value-added messaging and communications services, with a Hold recommendation as the company gradually stabilizes subscriber usage revenue in spite of facing difficult economic conditions. This is particularly important since the credit-sensitive customers constitute a vast majority of JCOM's sales.

The company is pursuing new business opportunities for both digital faxing and voice services through a strategy of effective acquisitions. We believe JCOM's unique integrated communications offerings have significant potential as the company already has an established presence in 44 different countries.

JCOM is currently trading at 15.8x our fiscal 2008 earnings estimates. This is at a premium to the S&P 500 and the peer group averages. With respect to other selected valuation metrics, the stock is also trading well above its peers. We set a six-month price target of $28, based on a net of cash 15.34x our fiscal 2008 earnings estimates plus $3.45/diluted share of net cash balance.