As highlighted previously, there is a noticeable trend towards healthier consumption habits, driven by movements like “Make America Healthy Again” (MAHA) and the growing popularity of miracle weight-loss drugs that suppress appetite. This shift marks a significant turning point for the restaurant industry in the United States.
The recent decision by Redburn Atlantic analyst Edward Lewis to downgrade McDonald’s from a “Buy” to a “Sell” rating, citing the impact of GLP-1 weight-loss drugs on consumer appetites, has garnered attention. Lewis stands out as the sole bearish voice among 41 analysts tracked by Bloomberg, setting a Street-low price target of $260 for McDonald’s.
Key points behind the downgrade:
- GLP-1 weight-loss drugs are impacting consumer behavior, posing a long-term threat to the fast-food industry.
- Lewis predicts that these drugs will lead to significant shifts in consumer habits, affecting group dining and reducing demand, particularly among lower-income individuals.
- He warns that what may seem like a minor decline now could escalate to a substantial decrease over time.
Additional observations:
- Started coverage of Domino’s Pizza with a sell rating.
- Designated Chipotle as neutral.
- Upgraded Yum Brands to buy, citing favorable valuation, conservative forecasts, and strong global presence.
Furthermore, recent reports from Goldman analysts Leah Jordan and Eli Thompson suggest a shift in consumer preferences towards healthier options, affecting supermarket sales.
On Monday, Jordan downgraded General Mills and Conagra Brands due to various challenges, including rising costs and evolving consumer preferences towards fresh, nutritious alternatives.
It is crucial to monitor these changing consumer patterns, especially amidst a national health crisis.
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