Atour Lifestyle Holdings (ATAT – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Ronald Leung from Bank of America Securities reiterated a Buy rating on the stock and has a $23.70 price target.
Ronald Leung has given his Buy rating due to a combination of factors related to Atour Lifestyle Holdings’ financial performance and growth potential. Despite the company’s guidance for flat year-over-year revenue per available room (RevPAR) in FY24, which is below market expectations, Leung remains optimistic about the long-term growth prospects. He notes that the stock is trading at attractive valuations, with a price-to-earnings (P/E) ratio of 15 times and 13 times ex-cash on estimated 2024 earnings. Additionally, Atour’s focus on a franchisee model is believed to generate strong free cash flow, which positions the company well for potential dividends or share buybacks within the year.
Moreover, Leung is confident in Atour’s growth narrative, as the company continues to expand its hotel portfolio aggressively. The firm’s guidance indicates a significant increase in total and retail revenue growth for FY24, estimated at 30% and 50% respectively. This is in line with the company’s strategy to open 360 new hotels, including 200-220 Atour hotels and 60-80 Atour Light hotels. Although the 4Q23 profits were impacted by weaker RevPAR, this was balanced by better retail segment contribution, and the company maintains guidance for stable to slightly expanding margins. Leung’s revised price objective reflects a modest adjustment due to the recent RevPAR performance but maintains a strong Buy rating in light of Atour’s robust unit growth and earnings potential.
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Atour Lifestyle Holdings (ATAT) Company Description:
Atour Lifestyle Holdings Limited, through its subsidiaries, provides lifestyle brands around hotel offerings in the People’s Republic of China. The company operates a series of themed hotels, including music hotels, basketball hotels, and literary hotels catering to the various lifestyles across different age groups with varied interests. The company also provides hotel management services, including day-to-day management services of the hotels for the franchisees; and sells hotel supplies and other products. Atour Lifestyle Holdings Limited was incorporated in 2012 and is headquartered in Shanghai, China.
