McDonald's (NYSE:MCD) took a hit Tuesday after Redburn Atlantic downgraded the fast-food giant to Sell its only such rating on the stock. The firm also slashed its price target to $260, about 15% below Monday's close, sending shares briefly below $300 during the session.

The call marks a two-notch downgrade from a previous Buy rating, and it reflects deeper concerns about changing customer habits, rising inflation, and the growing impact of weight-loss drugs.

Redburn analyst Chris Luyckx said medications like Ozempic could shave $428 million off McDonald's annual system sales roughly 1% and that impact may grow. Meanwhile, the U.S. business is already under pressure: same-store sales dropped 3.6% in Q1, the biggest slide since 2020, and fast-food traffic has declined in 40 of the past 43 months.

Even with higher prices and larger average orders, McDonald's may be pricing out its lower-income customer base. Luyckx argued that while the chain typically performs well during downturns, recent price hikes could be damaging its long-held image as an affordable option.

Despite the concerns, McDonald's stock is still up 5% this year. But the analyst warned that growth could stall unless the company updates its menu and offers better value.

The downgrade extends the stock's losing streak to six days, down from a high above $326 per share in mid-May.

This article first appeared on GuruFocus.