It was a relatively common term in the early 20th century, both popularly and in academia (e.g. Schacht's On the Origins of Muhammadan Jurisprudence). It has fallen into disfavor on the grounds that:

1. It is misleading (as it suggests a falsely analogous role of Muhammad in "Muhammadanism" as Christ in Christianity)
2. It is not what practitioners of this religion call themselves
3. Combining 1 and 2 it is both patronizing (an example of orientalism) as well potentially offensive, and needlessly so.

Moreover, outside of a historical reference or quotation I can't really think of any useful reason to use Muhammadan rather than Muslim. This is in contrast to other terms that might trip all three issues I raised above but that nonetheless continue to serve some descriptive or other purpose.