ATAT: Expanding Hotel Network Will Drive Sleep Economy Upside In 2025

Analysts nudged their blended price target for Atour Lifestyle modestly higher by about $0.45 per share, citing stronger than expected Q3 growth, upgraded revenue guidance of roughly 35% year over year, and continued expansion in both hotel operations and sleep focused retail offerings.

Analyst Commentary

Analyst commentary around Atour Lifestyle remains overwhelmingly constructive, with recent coverage highlighting robust execution in both hotel operations and the broader sleep economy, alongside raised price targets and guidance upgrades.

Bullish Takeaways

• Bullish analysts point to Q3 revenue growth of about 38% year over year and a roughly 26% increase in non GAAP net profit as evidence that Atour is executing ahead of expectations, supporting higher valuation multiples.
• Multiple firms have lifted price targets into the mid to high $40s, while JPMorgan initiated with a $57 target and Overweight rating, arguing that Atour can deliver roughly 20% revenue and profit growth annually over the next 3 to 5 years.
• Raised revenue guidance to approximately 35% year over year, combined with stronger than expected adjusted EBITDA, reinforces confidence in management’s ability to deliver on ambitious growth targets and monetize its expanding hotel footprint.
• The company’s position as a leading upper mid scale hotel operator in China, coupled with strong momentum in the Planet Deep Sleep Solutions brand and associated products, is viewed as a differentiated growth driver versus both domestic and global peers.

Bearish Takeaways

• While targets and ratings are positive, cautious analysts note that current valuations already discount a multi year high growth scenario, leaving less room for error if revenue or profit growth moderates.
• The strategy relies heavily on sustained expansion in the midscale and Atour Light segments, which could face competitive pressure and potential saturation risk if new openings or franchise quality fall short.
• Growth expectations around the sleep focused retail business, including projections for gross merchandise volume to rise about 60% in 2025, introduce execution risk if consumer demand normalizes or product innovation slows.
• Dependence on the China travel and consumption backdrop means macro or regulatory headwinds could weigh on both occupancy and discretionary spending, challenging the high growth and margin assumptions embedded in current forecasts.

What's in the News

• Issued full year 2025 earnings guidance, projecting total net revenues to increase by 35% compared with full year 2024 (company guidance).

Valuation Changes

• Fair value estimate has risen slightly from $46.57 to $47.01 per share, reflecting a modestly more optimistic outlook.
• The discount rate increased marginally from 9.00% to about 9.04%, implying a slightly higher required return and risk premium.
• Revenue growth was nudged higher from roughly 22.0% to about 22.5%, signaling a small upgrade to long term top line expectations.
• Net profit margin edged down from about 18.1% to roughly 17.9%, indicating a slightly more conservative view on future profitability.
• The future P/E multiple ticked up modestly from 20.3x to about 20.4x, suggesting a marginally higher valuation applied to projected earnings.