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.
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