The Dane again struggled in defeat at home to Wolves on Sunday.
"I'm looking at a damaged player in Hojlund," Shearer said on Match of the Day. '" think he wasn't ready and isn't ready to lead the line at a club like Manchester United.
"Three Premier League goals, and at the minute I'm seeing a player that doesn't really want to get in there.
"He's perhaps a second too early or a second too late, and his timing is all wrong. I think there's no doubt he's (suffering from) a crisis in confidence.
"He's been put into a really difficult situation at a club where unless you're exceptional, to lead the club for the football club you have to be really talented.
"He's not at the stage of his career where he should be leading the line. I'm not saying there's not a good player in there, I think there is a good player in there.
"But the pressure that's on him in terms of doing what he can't do and also the price-tag, he's not ready to lead the line as yet."