How Vonage Holdings, Inc. Stock Rose 48.5% in 2017

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What happened

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Shares of Vonage Holdings (NYSE: VG) gained 48.5% in 2017, according to data from S&P Global Market Intelligence. The provider of digital communications services had a rocky year with plenty of speed bumps, but when times were good, the stock simply skyrocketed.

So what

Vonage shares were trailing the wider market at the middle of 2017, even trading down by a few percent. Then the company reported second-quarter results in early August, and stock prices jumped 12% higher the next day. The report was a mild surprise, exceeding Wall Street's revenue estimates by 2% and their earnings consensus by a single penny per share.

Vonage then traded sideways for three months, until the third-quarter report in November triggered another 8% surge overnight. This time, several analysts followed up on the report, which showed in-line earnings and strong sales, with a handful of uprades or price target boosts. All told, Vonage shares soared 25% higher in November alone.

Now what

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Formerly known as the seller of internet-based phone services aimed at the consumer market, Vonage has retrained its targets on the more lucrative market for corporate communications. Accordingly, Vonage's consumer sales are dwindling while enterprise and small-business clients more than make up for the difference.

The company is weaving its way through this focus shift, taking care not to scare off its consumer-grade revenue generators too quickly and also maintaining positive earnings throughout the process. Investors are getting excited about the new and improved Vonage, and for good reason.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.