Atour Lifestyle Holdings is Wednesday's pick for IBD 50 Growth Stocks To Watch as the China stock remains in a base despite an earnings sell-off. The hotel stock is attempting to rebound Wednesday, after Tuesday's 5.7% plunge following the report.
The company owns and manages a hotel chain in China. As of Sept. 30, it owned 1,533 hotels with 175,199 hotel rooms in operation across Atour's hotel network, according to its third-quarter earnings release. In addition, it reported it had 732 hotels under development. In October, it unveiled its new upscale brand, Savhe Hotels.
China Stock Tests Critical Level
The China stock gained more than 2% Wednesday as it tries to climb back from Tuesday's drop. The stock sank Tuesday even after the hotel operator reported a beat on third-quarter earnings and sales early in the day.
Shares are in a newly forming undefined base with a 29.15 buy point, according to MarketSurge pattern recognition. The stock has shown large daily spreads within the base.
Shares are back above the 50-day moving average after two days of testing it. Its relative strength line has been on a downtrend since early October, which is a sign of weakness.
Atour Profits Continue To Climb
The hotel operator's third-quarter profit grew 47% on a 53% sales increase.
Astute investors may have clued in on Atour's third-quarter occupancy rate. It dropped to 80.3% vs. 82.4% for the year-earlier quarter and also showed a decline in revenue per available room.
But Atour predicted full-year 2024 net revenue growth of 48% to 52% vs. 2023. And the company is focused on bolstering its hotel chain.
"We accelerated the expansion of our hotel network, with 140 new hotel openings during the quarter, once again setting a quarterly record," Haijun Wang, Atour chairman and chief executive, said in the company's earnings release.
Profit Forecasts Upped
Meanwhile, analysts polled by FactSet have revised full-year 2024 profit forecasts upward to show a 34% lift, along with a 27% rise in 2025.
The IBD Accumulation/Distribution Rating of B for Atour indicates moderate institutional buying over the last 13 weeks. In addition, its 1.6 Up/Down Volume Ratio shows positive demand for the hotel stock in the last 50 days.
Atour stock holds a best-possible 99 Earnings Per Share Rating and a 98 Composite Rating.
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