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FBR initiates Spark Energy at 'outperform' on acquisition opportunities

FBR& Co. underscored SparkEnergy Inc.'s acquisition opportunities in initiating coverage ofthe company's class A shares with an "outperform" rating and 12-monthprice target of $27 per share.

In anApril 26 investor note, FBR analyst Carter Driscoll said penetration bycompetitive retailers in deregulated U.S. energy markets stands at around 30%for electricity and less than 15% for natural gas, presenting a largeopportunity for Spark Energy.

"Webelieve Spark will be able to aggressively expand its EBITDA both organicallyand, more rapidly, through acquisitions over the next one to two years,"Driscoll added. "We believe Spark is in a unique position to capitalize onattractive acquisition opportunities for which the usual competitive biddersare unlikely to be present due to over-leverage and/or recent largeacquisitions."

Driscollestimates the company's full-year adjusted EBITDA at $57.8 million in 2016, andat $67.1 million. Spark Energy, which is majority-owned by , 2016 adjusted EBITDA ofbetween $44.0 million to $48.0 million.