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Shake Shack’s big gains on Wall Street have surprised some analysts who follow the fast food service sector. John Zolidis is one of them, as he isn’t impressed with the company’s most recent earnings report and guidance.

“Shake Shack (SHAK) reported figures that were generally in-line with our expectations for upside on the top-line but weakness in margins,” he says. “The company reduced its full-year restaurant level margin target to ‘approximately 23%’ from ‘near the low end of 23%-24%’. The company didn’t justify this change, which was made concurrent with lifting the outlook for total sales. However, we believe a factor is the ongoing sequential weakening of new units, which missed our assumption for the quarter.”

“Revenue, and EPS upside and a guide-up all serve to support the stock’s 13-year high valuation,” said John Zolidis, following the release of strong financial results last week for Starbucks. “We continue to like the shares long, for the reasons we have reiterated (global growth, ROIC profile, FCF, return of capital, innovation in product and technology) although the name is not for the valuation sensitive and we do expect a period of consolidation at some point.”

“The way we see the shares here is that the debate about whether the brand can recover from food safety issues in an environment of increased competition is over, and the stock performance now turns on the whether the rate of recovery can exceed expectations currently factored into estimates and valuation,” wrote John Zolidis, president of Quo Vadis Capital.

“Target has every reason to be failing right now,” wrote John Zolidis of Quo Vadis Capital in New York. “Its largest competitors are spending aggressively to take share. The weather is always bad.” But the retailer keeps outperforming, he continued, because it has a strategy “designed for this environment.” (It doesn’t hurt that a lot of other retailers are doing so poorly, he adds.)

Meanwhile, equity analysts are already concerned with Luckin’s valuation. John Zolidis is one of them. “We had a chance to go through the company’s F-1 filing (equivalent of an S-1), says Zolidis. “If we are doing the math right, the company is seeking a $3.5-$3.9B valuation with last year’s revenues of only $125M and a full-year EBIT loss of $238M,” he said. “We get that LK has super-fast unit growth and it using promos to drive trial, get downloads for its app, and sign-ups for the loyalty program.”

That would certainly help the company burn a great deal of cash, but it won’t make it profitable. “Our initial conclusion is that it will difficult for this company to turn the current operating model into a profitable and cash generating business,” adds Zolidis.

“Everyone that follows Amazon is jumping up and down about how exciting this is,” Zolidis told Business Insider. “But this was expected.”

Same-day shipping, not one-day shipping, is the “real battleground” for retailers, and Walmart and Target are well positioned to win that war, he said.

In conversations last October with Walmart CEO Doug McMillon, McMillon characterized same-day shipping as the “final frontier” that “everyone is racing to develop,” Zolidis said. Walmart did not immediately respond to a request for comment on this story.

ome analysts said large retailers won’t have much difficulty competing. In a research note on Friday, John Zolidis, president of Quo Vadis Capital, said it would be a mistake for investors to sell shares of large retailers such as Target and Walmart on Amazon’s announcement.
“They have anticipated this for some time and are already rolling-out corresponding services,” he said. “The losers here are going to be retailers that are already behind the curve and don’t have the financial strength to make the investments to develop these capabilities.”

John Zolidis, president of Quovadis Capital, in a note Thursday blamed the deterioration on those cuts to labor.

“We attribute the weakness to the competitive environment but also the company’s decision, starting in the first quarter last year, to significantly reduce labor hours in the stores, which we believe directly impacted service and, subsequently, traffic,” he wrote.

“We believe a Disney streaming offer could easily become a must-have subscription, perhaps even more successful than Netflix (which currently has access to much Disney content),” says equity analyst John Zolidis.

John Zolidis, president of Quo Vadis Capital, said that because of its Family Dollar acquisition, Dollar Tree believes it now has the expertise to try to boost prices at its namesake stores. But it’s a risky proposition.

“The $1-only proposition is what makes people love Dollar Tree so much,” Zolidis said. “Moving away from that brand equity does present a pretty significant risk to the concept on a long-term basis if it becomes just another store. Right now, it’s unique.”