On Tuesday, Citi analyst Lydia Ling updated the firm's outlook on Atour Lifestyle Holdings (NASDAQ: ATAT), increasing the price target to $30.50 from the previous $29.50 while maintaining a Buy rating on the stock. The adjustment follows Atour's reported third-quarter financial performance, which saw a substantial year-over-year net profit increase of 47% to Rmb384 million. This figure surpassed Citi's and consensus estimates by 12% and 14%, respectively. Revenue for the same period also rose by 47% year-over-year to Rmb1.89 million, aligning with expectations.
Atour's third-quarter store expansion exceeded forecasts, compensating for the decline in Revenue per Available Room (RevPAR). The company's margin performance was stronger than anticipated, largely due to more effective cost control measures. Management has reaffirmed its full-year 2024 revenue guidance, projecting a 48-52% year-over-year increase. However, they have adopted a more cautious stance on RevPAR, anticipating a mid-single to high-single-digit year-over-year decline, while setting a higher target for gross store openings.
Citi has made slight adjustments to its forecast for Atour based on the improved margin outlook, leading to the raised price target. The financial institution will facilitate a group investor call with Atour Lifestyle Holdings at 9 am Hong Kong Time on November 20, for which registration is required. This call is expected to provide investors with an opportunity to engage directly with Atour's management and discuss the company's performance and outlook.
In other recent news, Atour Lifestyle Holdings witnessed a significant increase in its Q2 2024 earnings, marking a robust 64.5% year-over-year growth in net revenue. This growth was primarily driven by strong performances in its hotel and retail sectors, particularly the Atour Planet brand. The company also set a new quarterly record with 123 hotel openings, and increased its full-year target to 400 hotels.
Morgan Stanley (NYSE:MS) reiterated its Overweight rating on Atour Lifestyle Holdings, with a steady price target of $32.50. The firm anticipates Atour's stock will outperform its industry peers in the next 60 days, driven by robust growth figures. The company is expected to report over 40% year-over-year growth in both revenue and net income, surpassing the consensus forecast of a 30% growth rate.
The positive outlook is attributed to an increase in hotel openings and associated supply chain revenues, which are expected to fuel the growth. The expected outperformance is primarily due to the company's expansion strategy.
Atour Lifestyle's membership program continues to prosper, with a 72.5% increase in individual members. The company has raised its full-year revenue growth guidance to 48-52% and announced a three-year annual dividend policy.
InvestingPro Insights
Atour Lifestyle Holdings' strong financial performance, as highlighted in the article, is further supported by data from InvestingPro. The company's revenue growth of 91.74% over the last twelve months as of Q2 2024 aligns with the impressive year-over-year increase reported in the third quarter. This growth trajectory is complemented by a robust EBITDA growth of 153.67% over the same period, indicating effective operational management.
InvestingPro Tips suggest that Atour is a prominent player in the Hotels, Restaurants & Leisure industry, which is consistent with its strong market position discussed in the article. The company's profitability over the last twelve months and analysts' predictions of continued profitability this year reinforce the positive financial outlook presented by Citi.
The stock's strong return over the last three months, as noted by InvestingPro, correlates with the company's better-than-expected Q3 performance and Citi's increased price target. With a current price of $27.09, Atour is trading at 88.2% of its 52-week high, suggesting potential for further growth in line with Citi's new target of $30.50.
Investors seeking more comprehensive insights can access additional tips and data through InvestingPro, which offers 11 more tips for Atour Lifestyle Holdings.
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