7 Days Group Holdings Ltd. Has Solid 3Q10 Results

Brean Murray Carret & Co. published its research report on 7 Days Group Holdings Ltd. (NYSE: SVN) showing strong 3Q10 results.

7 Days revenue beat BMC & Co.'s estimate by RMB10 million. They also had better EBITDA figures than estimated which BMC & Co. attributes to "improving operating leverage with higher revenue per hotel and an increased proportion of franchised hotels (39% of total revenue as of 3Q10."

With these strong 3Q10 results came an increased price target of $23 from $17.

BMC & Co. writes, "We use EV/EBITDA multiples for the valuation of our lodging sector companies. We are raising our target price to $23 from $17, implying 17% upside from the current level. Our target price represents 15x our 2011 adjusted EBITDA estimate of $72 million (with $69 million net cash as of 3Q10), on par with other lodging peers."

7 Days has a Buy rating and is currently trading at $19.66.