GLP-1 drugs reshape consumer habits, Wall Street rarely downgrades McDonald's rating
Redburn Atlantic analyst Edward Lewis has become the first analyst to recently downgrade McDonald's rating from "Buy" to "Sell," citing that GLP-1 weight loss drugs will suppress consumer appetite. He warned that these drugs will trigger widespread behavioral changes, affecting group dining and reducing habitual demand, especially among low-income consumer groups
When only one of the 41 analysts on Wall Street dares to issue a "sell" rating on McDonald's, it may signal a turning point—GLP-1 weight loss drugs are quietly rewriting the rules of the game in the American fast food industry, and investors seem unprepared for this.
Redburn Atlantic analyst Edward Lewis has become the first analyst to downgrade McDonald's rating recently, from "buy" to "sell," citing that GLP-1 weight loss drugs will suppress consumer appetite.
Lewis stands out among the 41 analysts tracked by Bloomberg, maintaining a bearish stance. He set a target price of $260, significantly lower than the average expectation of $332 and the latest closing price of $304.78.
Lewis warned that these drugs will trigger widespread behavioral changes, affecting group dining and reducing habitual demand, especially among low-income consumers. He emphasized that what seems like a "1% drag" today could evolve into a blow of over 10% over time.
The Dilemma of the Fast Food Industry Under Multiple Pressures
In addition to the structural threat posed by weight loss drugs, Lewis also pointed out that American consumers are showing fatigue after years of menu price inflation. Meanwhile, rising tariffs are squeezing brands with limited pricing power.
In the same round of rating adjustments, Lewis initiated a "sell" rating on Domino's Pizza, rated Chipotle as neutral, but upgraded Yum Brands to "buy," citing its more reasonable valuation, conservative expectations, and strong international business exposure.
This downgrade is not an isolated event. Last month, Goldman Sachs analysts Leah Jordan and Eli Thompson reported to clients that early signs indicate consumers are shifting towards "healthier options" in supermarkets. Jordan stated:
"Snack demand is weak, healthier options are performing well."
On Monday, she downgraded General Mills and ConAgra brands, citing increased cost pressures (raw materials, tariffs, advertising investments) and moderate demand in the context of a shift towards fresh foods and intensified competition from private labels and smaller brands.
This shift towards healthy consumption, whether driven by the "Make America Healthy Again" (MAHA) movement or the increasing adoption of weight loss "miracle drugs," marks the arrival of a turning point in the American dining industry. For a nation facing a nationwide health crisis, whether this shift towards healthy consumption can be sustained will determine the future direction of the entire industry
