Forget the Correction: This Stock Is Defying the Sell-Off, and There Might Be More Upside Ahead

The tech-heavy Nasdaq Composite index recently entered correction territory. Though it was able to climb out of it, equities broadly remain down for the year. Still, some companies are performing well amid the volatility.

AstraZeneca (NASDAQ: AZN), a U.K.-based pharmaceutical giant, is one of them; its stock is up by an impressive 16% since January. This performance so far in 2025 is not a fluke. And the stock may deliver strong returns, if not in the next few weeks, but for investors willing to hold onto its shares for years.

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AstraZeneca's financial results remain strong

AstraZeneca's shares fell off a cliff late last year when it announced the arrest of some of its executives in China, including Leon Wang, the drugmaker's president in the country. That's on top of an insurance fraud investigation in China it had been dealing with, and allegations that the company imported illegal pharmaceutical drugs into the country.

Though these problems are worth monitoring, AstraZeneca's financial results certainly aren't an issue. Last year, its revenue jumped by 18% year over year to $54.1 billion, an excellent performance for a pharmaceutical giant. Adjusted earnings per share were $8.21, 13% higher than the previous fiscal year. AstraZeneca operates several segments focused on various therapeutic areas, and every one except "other medicines" saw sales move in the right direction in 2024.

Even with the challenges that AstraZeneca is dealing with now, last year's decline in its share price may have been overdone, given the company's strong financial results. That's likely why the stock has performed well since December, and has kept that momentum through market volatility this year.

Short-term issues won't be a death sentence

If it's found liable for illegal drug importation in China, AstraZeneca could incur a fine. The potential fine in China could amount to 100% to 500% of the unpaid importation taxes of $0.9 million. At worst, AstraZeneca will pay $4.5 million if it's found guilty -- a drop in the bucket for a company that generates tens of billions of dollars in annual revenue.

The company will also face two patent cliffs in the U.S. this year. The first is for Soliris, a medicine for a rare blood disease called paroxysmal nocturnal hemoglobinuria. The second is for Brilinta, a treatment used to reduce the risk of heart attacks. Neither of these patent expirations should be a game changer for AstraZeneca.

Soliris' sales in 2024 totaled $2.6 billion, but declined 18% year over year due to patients switching to AstraZeneca's newer Ultomiris. Brilinta's revenue in 2024 came in at $1.3 billion, up 1% year over year -- it was already facing generic competition in other countries. Because Soliris and Brilinta contributed little (if anything at all) to the pharmaceutical giant's top-line growth last year, the loss of exclusivity for these medicines won't harm its prospects.

There is plenty to root for

AstraZeneca has a lot to offer investors: a vast and diversified lineup of medicines, a deep pipeline, and steady revenue and earnings growth. Its lineup featured 14 medicines that each generated over $1 billion in sales last year. Yes, some will lose patent exclusivity, but others will fill the gap. Breztri, a treatment for chronic obstructive pulmonary disease (COPD), came short of blockbuster status for AstraZeneca last year with sales of $978 million, but they were up by 44% compared to 2023. Several other drugs should also continue to help drive strong top-line growth for the pharmaceutical leader, including the newer cancer therapy Truqap.

Meanwhile, AstraZeneca's pipeline will likely unearth more gems. Like other drugmakers, it's now seeking to join the promising weight loss area. The company's investigational oral GLP-1 therapy, AZD5004, is undergoing phase 1 and 2 clinical trials across diabetes, weight management, and several other potential indications. (All currently approved GLP-1 medicines are administered subcutaneously, so there could be a reasonable demand for an oral option.) The company's AZD9550 is another potential GLP-1 medicine in early-stage studies.

Beyond that, AstraZeneca is running many clinical trials across various therapeutic areas. The company had over a dozen regulatory approvals or clinical trial readouts in the fourth quarter. You can expect more of the same every period, which should allow its financial results to remain strong over the long run, even as it faces patent cliffs.

Investors should see past the headwinds -- many already are, since the stock is performing well right now. But it's still time to think about purchasing shares of AstraZeneca. The drugmaker could deliver excellent returns.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends AstraZeneca Plc. The Motley Fool has a disclosure policy.