Greggs Plc shares slid on Monday after Jefferies downgraded the stock to 'hold' from 'buy' and slashed the price target to 1,610p from 2,500p as it said weight-loss jabs could dent demand for the bakery chain's products.
Jefferies noted that Greggs has faced a prolonged slowdown, with like-for-like sales weakening steadily since mid‑2024 and volumes turning consistently negative.
"While management referenced softer consumer spending and unfavourable weather, these explanations do not, in our view, account for the persistence or depth of the trend," it said. "Q4 offered some stabilisation but fell short of expectations, with negative volumes continuing, a slowing two‑year stack, and FY26 guidance cut circa 10% below consensus."
Jefferies argued that Greggs could be facing a more structural issue.
"While investor concerns have typically focused on pricing and cannibalisation, we are increasingly of the view that the rapid uptake of GLP‑1 weight‑loss drugs is impacting Greggs," it said.
Jefferies noted that GLP-1 user numbers have risen sharply, now touching an estimated 7% of UK adults, with consumption patterns changing meaningfully.
"And the categories most affected are savoury, salty, fatty, and high‑calorie foods," it pointed out.
"While the typical GLP‑1 demographic may only partially overlap with Greggs' customer base, those affected are likely to be higher‑BMI, higher‑frequency consumers - precisely the customers most valuable to Greggs."
Reflecting these dynamics, Jefferies lowered its medium‑term assumptions. It now models LFL growth of 2.5%, down from 4.5%, the main swing factor being a continuation of negative volumes resulting from the enduring impact of weight-loss drugs.
Nevertheless, Jefferies said Greggs remains a high‑quality operator with strong brand equity, attractive return on invested capital, robust cash generation and "a still‑compelling long‑term rollout opportunity".
It said weather comps will ease in 2026, cyclical pressures should fade, and store expansion continues to underpin revenue.
At 1020 GMT, the shares were down 4.9% at 1,598.42p.