Jefferies has reduced its recommendation on Greggs (LON:GRG) to "hold" from "buy" and cut its price target to 1,610p from 2,500p, citing what it describes as mounting, structural headwinds tied to the rising use of GLP-1 weight-loss drugs.
The brokerage said this reassessment follows evidence of roughly 18 months of falling sales volumes at the UK bakery chain and noted that shares fell more than 3% on Monday after the update. Jefferies added that the business currently trades at 1,675p, while characterising the rapid uptake of GLP-1 receptor agonists such as Mounjaro and Wegovy as a "noticeable headwind" for Greggs.
Analyst adjustments and forecasts
Reflecting the shift in outlook, Jefferies trimmed its medium-term like-for-like (LFL) sales growth assumption from 4.5% to 2.5%, driven primarily by expectations that negative volume trends will continue. The brokerage highlighted a steady weakening in LFL sales since mid-2024 and has observed sustained negative volume readings over that period.
Greggs reported Q4 2025 LFL growth of 2.9%, which fell short of management guidance for approximately 4% growth even after weather normalised. Jefferies notes that price accounted for about 5-6 percentage points of LFL growth, from which it infers ongoing volume declines in the region of 2% to 3%.
On margins and profits, Jefferies now models an EBIT margin contraction of 50 basis points in FY26 and a further 30 basis points in FY27. The brokerage expects FY26 pre-tax profit of £171 million, effectively flat against its estimate for FY25 of £170 million.
Link to weight-loss drugs and consumption changes
Jefferies draws on usage data to support its thesis that GLP-1 drugs are changing consumer behaviour relevant to Greggs. It cites IQVIA figures showing UK users of Mounjaro and Wegovy reached 2.5 million by July 2025 - an increase of nearly 70% over a four-month span and a fivefold rise year-over-year. The report suggests current usage likely approaches 4 million users, which it equates to roughly 7.5% of the UK adult population.
Crucially for Greggs, studies referenced by Jefferies indicate that GLP-1 users cut daily calorie intake by 25% to 30%, translating for higher-intake consumers into around 1,000 fewer calories per day. The most significant reductions occur in savoury, salty, high-fat, and calorie-dense categories - product types that are central to Greggs' menu.
Customer overlap and management comments
The analysts acknowledge that typical GLP-1 users skew older, female, and higher income - demographics that do not perfectly overlap with Greggs' core customers. However, Jefferies warns that the intersection matters: where GLP-1 users and Greggs' higher-value customers overlap, individuals with higher BMI - described as "some of Greggs' best customers" - may reduce or cease their spending with the business.
Greggs' CEO Roisin Currie was quoted as saying in January 2026 that there was "no doubt" weight-loss drugs were impacting the business, a point the brokerage notes in its assessment.
Context on other explanations
Management has previously attributed trading weakness to softer consumer spending and adverse weather - including Storm Eowyn in January 2025 and the warmest UK summer on record. Jefferies argues those factors do not fully explain the persistence or magnitude of the volume decline it and the company have observed.
Implications for markets and stakeholders
Jefferies' downgrade and tightened assumptions signal a reassessment of Greggs' near- to medium-term earnings trajectory and margin profile. The brokerage's updated modelling - smaller LFL growth, volume-led weakness, and compressed margins - informed the change in recommendation and the lower price target.
Investors and sector observers will likely watch volumes, management commentary, and any evidence of customer behaviour normalisation closely to gauge whether the trend identified by Jefferies is structural or could moderate over time.