Is AstraZeneca Stock a Buy?

U.K.-based pharmaceutical giant AstraZeneca (NASDAQ: AZN) is making news, but not in a good way. Its operations in China were recently rocked when Leon Wang, the company's president in the country -- as well as several other top executives -- were arrested following fraud-related investigations by the authorities. AstraZeneca expects a sales hit in China, one of its most important international markets.

The drugmaker's issues in China have weighed heavily on its performance of late, and its stock is down by about 3% year to date. Amid all that, should you purchase shares of AstraZeneca?

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Looking at AstraZeneca's financial results

AstraZeneca's shares performed well for much of the year. That's partly because the company has been delivering strong financial results. In the third quarter, revenue increased by 18% year over year to $13.6 billion. Adjusted earnings per share were $2.08, 20% higher than the year-ago period. AstraZeneca's oncology business is arguably its most important; it racked up $5.6 billion in sales during the third quarter, up 19% compared to the prior-year quarter.

But it wasn't just this unit: All of AstraZeneca's business segments posted strong revenue growth during the quarter. The least impressive was rare diseases, whose sales of $2.1 billion jumped by 9% year over year. However, investors probably focused on one metric: AstraZeneca's results in China. The company's revenue in the country was $1.7 billion, 15% higher than in Q3 2023.

Management had something to say about the investigation into its executives in China. In the third-quarter earnings release, the company stated that it took this matter seriously and promised to cooperate with the authorities if necessary. That's cold comfort to long-term investors, who might see the issue as a significant risk for the pharmaceutical company.

Dipping its toes into the weight-loss market

Setting these problems aside, it's important to highlight that AstraZeneca isn't just reporting solid results. It also has several exciting pipeline candidates, including in the fast-growing area of weight-loss therapies, where it has at least three candidates. One is AZD5004, a potential oral GLP-1 medicine. Currently approved GLP-1 therapies are administered via injection once a week; an oral formulation would attract patients who don't like needles.

In a phase 1 study, AZD5004 reduced patients' body weight by an average of 5.8% in 30 days. AstraZeneca has started phase 2 clinical trials for this candidate.

The company's other two investigational anti-obesity medicines are making progress, too. That said, many drugmakers are working on oral GLP-1 medications or weight-loss drugs of other kinds. AstraZeneca still has a long way to go before its candidates are approved, if they get that far.

Its prospects don't depend solely or even primarily on its weight loss pipeline, though. AstraZeneca boasts nearly 200 ongoing programs, including 21 brand-new clinical compounds in its late-stage pipeline.

Worth the risk?

In May, AstraZeneca set a target of $80 billion in revenue by 2030. Annual sales last year landed at $45.8 billion; If the drugmaker can reach the 2030 goal, its top line will record strong revenue growth through the end of the decade.

However, the company's master plan is now in jeopardy, given the situation in China. If it weren't for that, AstraZeneca's stock would look attractive. What should investors do?

Considering the uncertainty introduced by the China probe, AstraZeneca could be a steal at current levels if it can get around this issue. If you have a high tolerance for risk, you might want to consider initiating a small position in the stock. That could end up being a great move down the road, provided AstraZeneca can get beyond this setback.

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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.