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Time of India
11-06-2025
- Business
- Time of India
McDonald's downgraded amid Ozempic craze - investors worry fast food losing charm, stock under pressure
McDonald's stock was downgraded by analysts following concerns that weight-loss drugs like Ozempic could curb fast-food demand. Analysts suggested that these drugs, which reduce appetite, might lead to a significant drop in customer visits, potentially costing the company millions in revenue. Tired of too many ads? Remove Ads Equity Firm Downgrades McDonald's Stock How GLP-1 Medications Could Disrupt Fast Food Demand McDonald's Potential Revenue Losses and Customer Visit Declines Tired of too many ads? Remove Ads Inflation Adds Fuel to McDonald's Challenges Not Many Americans Are Using These Drugs Yet FAQs McDonald's faced a rough day on Wall Street Tuesday as shares dipped 1.7%, shaken by growing concerns that popular weight-loss drugs like Ozempic could seriously cut into the fast food giant's business, as per a analysis firm Redburn Atlantic lowered its rating on McDonald's stock by two notches from 'buy' to 'sell,' warning that the widespread use of GLP-1 drugs, which curb appetite and help regulate blood sugar, may change how Americans eat, potentially leading to a drop in millions of visits to McDonald's every year, as per CBS Redburn analysis described GLP-1 drugs like Ozempic and Wegovy as "demand disruptors" for restaurants like McDonald's , as they reduce consumers' appetites and limit the number of calories they consume each day, reported CBS News. Analysts wrote that, "These features of the drugs could have serious implications for the restaurant industry," according to the READ: YouTube loosens content rules, says freedom of expression can outweigh harm—controversial videos may return Analysts Chris Luyckx and Edward Lewis estimated that McDonald's could lose up to 28 million customer visits annually, resulting in nearly $482 million in lost revenue, roughly 0.9% of the company's sales, according to the concern is that GLP-1 drugs may shift eating habits, especially among lower-income consumers, who are the fast food chain's target market and who might cut back on dining out and keep those new habits long-term, as per CBS analysts pointed out that the "Behaviour changes extend beyond the individual user — reshaping group dining, influencing household routines and softening habitual demand. A 1% drag today could easily build to 10% or more over time, particularly for brands skewed toward lower income consumers or group occasions," quoted CBS to the pressure, rising prices and inflation might make it even harder for McDonald's to maintain its appeal to its customers, as per the report. The analysts highlighted that, "Consumers are showing clear signs of pricing fatigue after years of aggressive menu inflation," adding, "Although the gap between eating out and at home has narrowed, it remains historically wide, reinforcing value concerns," quoted CBS the adoption of the GLP-1 drugs has yet to reach a wider audience, as only 12% of Americans have tried the drugs, and currently just 6% of the adult population uses them, as per the the managing director and restaurant and food distributors analyst at BTIG global financial services, Peter Saleh said, "I don't think there would be a meaningful GLP-1 impact on McDonald's right now, but that's not to say that in three or four years that won't be the case," adding, "I just don't think we are there yet," quoted CBS medications that help regulate blood sugar and suppress appetite, often used for weight loss, as per to $482 million a year, according to some analysts.
Yahoo
11-06-2025
- Business
- Yahoo
Redburn upgrades Yum! Brands to Buy on international footprint
Redburn Atlantic upgraded Yum! Brands (YUM) to Buy from Neutral with a price target of $177, up from $146. The firm says Yum 'presents one of the most compelling setups' in its coverage. With an international footprint that continues to scale and Taco Bell delivering 'outsized' profit and innovation, Yum 'offers both defensive resilience and offensive optionality,' the analyst tells investors in a research note. Redburn believes the company's digital acceleration, diversified formats and 'strong' master franchise system further strengthen its growth algorithm. Yum's valuation looks attractive relative to its fundamentals, the firm contends. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>> See the top stocks recommended by analysts >> Read More on YUM: Disclaimer & DisclosureReport an Issue Yum! Brands upgraded to Buy from Neutral at Redburn Atlantic Yum! Brands sues IRS in tax court over $4B tax bill, Bloomberg says Trump says Fed 'must now' lower rates after ADP payrolls report: Morning Buzz Apple downgraded, Snowflake upgraded: Wall Street's top analyst calls Yum! Brands upgraded to Buy from Neutral at Goldman Sachs Sign in to access your portfolio
Yahoo
11-06-2025
- Business
- Yahoo
Redburn starts Domino's with Sell on heavy GLP-1 exposure
As previously reported, Redburn Atlantic initiated coverage of Domino's Pizza (DPZ) with a Sell rating and $340 price target Domino's faces the heaviest pressure from GLP-1 weight loss drug adoption, with high exposure to dinner occasions and lower-income consumers, the analyst tells investors in a research note. The firm says the company's organic traffic remains weak, with carryout far outpacing delivery. With system sales growth challenged and consensus expectations still elevated, there is downside risk for Domino's, contends Redburn. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>> See the top stocks recommended by analysts >> Read More on DPZ: Disclaimer & DisclosureReport an Issue Domino's Pizza initiated with a Sell at Redburn Atlantic Domino's Pizza: Strategic Initiatives and Market Positioning Justify Buy Rating Coca-Cola Stock (KO) Remains a Berkshire Hathaway Favorite Domino's Pizza: Balancing Growth Opportunities and Profitability Challenges Amidst Aggressive Market Environment Berkshire Hathaway exits positions in Citigroup, Nubank
Yahoo
11-06-2025
- Business
- Yahoo
Not Lovin' It: McDonald's Suffers Third Downgrade in as Many Trading Days
Could GLP-1 weight loss drugs and changing economic winds really take a bite out of the almighty Big Mac? Analyst after analyst after analyst seems to think so, as Redburn Atlantic on Tuesday became the third firm in as many trading days to downgrade McDonald's stock, often heralded as recession-proof. READ ALSO: Meta's Scoping Out a Superintelligence Lab and Robinhood, AppLovin Locked Out of S&P 500 Yet Again For years, McDonald's has been like the Dennis Rodman of the market. No, not for the ear piercings or the wild publicity antics or the Van Damme action movie: for being possibly the best defensive stock in the business. Shares in the fast food company outperformed the market in the 12 months leading up to all five recessions in the past 40 years and in the majority of recessionary periods that followed. With 41,000 locations, its massive scale allows it to set competitive prices, and 90% of its locations are franchises, meaning it obtained that scale with minimal capital investment. That has allowed McDonald's to focus on its chief proposition to customers: value. The sudden spate of downgrades, however, has called into question whether both behavioral and financial realities could erode the defensive prowess of the Golden Arches by rendering that proposition insufficient on its own: First under threat is McDonald's value proposition to consumers worried about the economy. McDonald's has seen same-store sales drop in the US for two straight quarters, with a 3.6% dip in the latest period and executives flagging even more concerning 10% drop-offs in traffic from lower- and middle-income consumers in the same period. On top of that, Redburn Atlantic analysts argued as they double-downgraded McDonald's from 'buy' to 'sell' on Tuesday, there are 'new behavioral challenges': the proliferation of glucagon-like peptide-1 drugs such as Ozempic, they said, could have a 'cumulative' impact on the chain's business, noting 'a 1% drag today could easily build to 10% or more over time.' There's also, according to Morgan Stanley analysts, a threat to McDonald's value proposition to investors: They pointed out on Monday upon their downgrade of the stock that the fast food chain is trading at nearly 25 times this year's earnings estimates. Compare that with Burger King-owner Restaurant Brands, Wendy's and Jack in the Box, which trade at 19, 12, and 4 times earnings estimates, respectively. An ongoing 'value war' among these and other chains, they noted, also means McDonald's 'pricing power has eroded,' reducing its leverage against its bargain-priced competitors. What Others Are Saying: Loop Capital, which downgraded McDonald's on Friday, cited negative feedback about the company's new chicken strips. Other words on the street might not bode well for business either. In April, Pepsico CEO Ramon Laguarta said GLP-1 consumers were 'keeping our brands in their repertoire, probably in a smaller portion,' hinting that food brands might have to cope with less consumptive consumers. Campbell's CEO Mick Beekhuizen said earlier this month that the budget-friendly canned goods company is observing people eating at home the most since the start of the pandemic in 2020. McDonald's shares fell 1.4% on Tuesday, paring this year's gains to 2.7%. Still, if you don't believe in the Cramer curse, CNBC clairvoyant Jim Cramer says the analysts betting against the Golden Arches are wrong. This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter. Sign in to access your portfolio
Yahoo
11-06-2025
- Business
- Yahoo
Redburn Turns Bearish on McDonald's (MCD), Domino's (DPZ) Amid GLP-1 Impact Concerns
Redburn Atlantic downgraded McDonald's (MCD, Financials) and launched coverage of Domino's Pizza (DPZ, Financials) with a Sell rating Tuesday, warning that appetite-suppressing weight-loss drugs like GLP-1s could reshape consumer dining habits long term. In a note, the firm said that while structural growth has benefited the sector for years, emerging behavioral shifts and economic fatigue may threaten that momentum. Even a 1% decline in demand today, Redburn warned, could snowball into double-digit erosion over time as GLP-1 use expands. These drugs which reduce appetite and support weight loss may lower not only individual consumption, but also disrupt group dining routines and habitual fast-food behavior, Redburn analysts wrote. McDonald's was downgraded from Buy to Sell on concerns about traffic weakness, rising menu fatigue, and vulnerability to pricing shocks. Redburn also flagged that U.S. consumers may face added pressure from renewed inflation and tariffs, reducing room for further price hikes. The firm gave Domino's a Sell rating on similar concerns, but upgraded Yum! Brands (YUM, Financials) to Buy, citing its international footprint and conservative valuation. Coverage of Chipotle (CMG, Financials) was initiated at Neutral. This article first appeared on GuruFocus.
