As far as Islamic Shari`ah is concerned, Prophet Muhammad’s name is not holy, rather it is an honorable, highly respectable name. As for us, Muslims, we highly respect our Prophet’s name as well as all the names of Allah’s Prophets (peace and blessings be upon them all). As it is an honorable name, a Muslim is not allowed to name a toy or the like with any of the names of Allah’s prophets.
Sheikh Mohamed El-Moctar El-Shinqiti, director of the Islamic Center of South Plains, Lubbock, Texas, states: The name of Prophet Muhammad (peace and blessings be upon him) is not holy but it is honourable and highly respected. Therefore, we should show the utmost respect for the Prophet (peace and blessings be upon him). That is why we should not name a toy or the like “Muhammad” because this contradicts the respect we owe to the Prophet (peace and blessings be upon him).

To know more about the veneration we ought to show the Prophet (peace and blessings be upon him), please refer to the beginning of Chapter 49 in the Qur’an (Surat Al-Hujurat).

Moreover, Sheikh `Abdul-MajeedSubh, a prominent Azhar University scholar, adds: The name “Muhammad” in itself is not holy. It was known in Jahiliyyah (Arabic for: the pre-Islamic period of ignorance), and Muslims in millions are named Muhammad despite the fact that some of them do not act in accordance with the kind of responsibility such a name implicates.

So, the name itself is not holy. Only the Names of Allah (Glorified and Exalted be He) are holy; therefore, when a person misuses a certain name of Allah, then he or she is included in the meaning of the Qur’anic verse [Allah’s are the fairest names. Invoke Him by them And leave the company of those who blaspheme His names. They will be requited what they do] (Al-A`raf 7:180).
Having stated the above, naming a toy or the like “Muhammad” bears some sort of insult to the Prophet (peace and blessings be upon him). This ruling is not only confined to Prophet Muhammad’s name (peace and blessings be upon him). Rather, it applies to all the names of all prophets (peace and blessings be upon them all). So, this is a general human legislation that includes all prophets’ names: Whoever insults or humiliates Muhammad’s name has the same ruling of one who insults or humiliates any of Allah’s prophets. This is one of the virtues and characteristics of Shari`ah that is humane, general, and not limited to a certain nation or country. 

Furthermore, Sheikh `AbdelKhaliqHassan Ash-Shareef, an Egypt-based renowned scholar and da`iyah, states: Muhammad is a human name that is honourable and respected. Many people are called Muhammad; had the name been holy, no human would have been named “Muhammad”.

As it is an honourable name, it is not allowed to name a toy or the like with it as it may lead to some sort of humiliation and degradation to the Prophet’s name. No one would be content to associate anything, even remotely, humiliating to his or her name or that of his or her parent. If this is the case with one’s own name or that of a parent, what would it be with the Prophet’s name?