On Friday, Morgan Stanley (NYSE:MS) reiterated its Overweight rating on Atour Lifestyle Holdings (NASDAQ: ATAT) with a steady price target of $32.50. The firm anticipates that Atour's stock will outperform its industry peers in the coming 60 days, driven by projected 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. Morgan Stanley assesses that there is a highly likely chance, over 80%, that Atour Lifestyle Holdings will achieve these results. This probability is a subjective estimate based on the firm's evaluation of the scenario's likelihood.
The analyst's comments highlight the key factors contributing to the optimistic assessment. The expected outperformance is primarily due to the company's expansion strategy, which includes a higher number of hotel openings that contribute to both top-line revenue and the bottom line. These developments are anticipated to lead to financial results that exceed market expectations.
Atour Lifestyle Holdings has not yet released its financial performance data for the period in question. The market will be closely watching to see if the company meets or exceeds the growth projections set forth by Morgan Stanley.
In other recent news, Atour Lifestyle reported a substantial increase in its Q2 2024 earnings, showing a robust 64.5% year-over-year growth in net revenue. This growth was 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 raised its full-year target to 400 hotels.
Atour'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.
Additionally, Atour expects a 48% to 52% increase in total net revenue for the full year of 2024. The company's retail business saw a year-over-year revenue increase of over 150% in Q2.
InvestingPro Insights
Atour Lifestyle Holdings' recent performance aligns with Morgan Stanley's optimistic outlook. According to InvestingPro data, the company's revenue growth stands at an impressive 91.74% over the last twelve months as of Q2 2024, surpassing the 40% year-over-year growth projection mentioned in the article. This robust growth is further reflected in the company's EBITDA growth of 153.67% over the same period.
InvestingPro Tips highlight that Atour is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of just 0.1. This suggests that the stock may be undervalued considering its growth prospects, potentially supporting Morgan Stanley's Overweight rating.
The company's strong financial health is evident from another InvestingPro Tip, which notes that Atour holds more cash than debt on its balance sheet. This solid financial position could provide the company with the flexibility to continue its expansion strategy and hotel openings as discussed in the article.
For investors interested in a more comprehensive analysis, InvestingPro offers 8 additional tips for Atour Lifestyle Holdings, providing a deeper insight into the company's potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.