‘Rare Buy Signal’ Sparks Reversal Hopes in AstraZeneca Stock (AZN)

Despite a rough outing in the market to start off the week, multinational pharmaceutical and biotechnology giant AstraZeneca (AZN) managed to move the needle in the right direction. Granted, there wasn’t much kinesis involved, but fundamentally, circumstances have looked intriguing for bullish investors of AZN stock.

Last week, a Bloomberg report revealed that AstraZeneca was discussing matters with Summit Therapeutics (SMMT) regarding a possible licensing deal for the biotech company’s ivonescimab therapeutic. The news pushed up SMMT stock….

While putting a dampener on AZN…

The strong investor sentiment behind the deal stems from Ivonescimab being a “bispecific antibody” that represents a novel standard of care for both first-line and second-line treatment in lung cancer.

According to Bloomberg, the potential deal is valued at around $15 billion, including a multibillion-dollar upfront payment and additional financial incentives tied to key performance milestones. For AstraZeneca, a global leader in oncology, the acquisition could provide an opportunity to advance the therapy to new heights.

While the fundamental narrative is arguably attractive for bullish investors, those with a shorter-term time horizon may be just as intrigued, if not more so. Against a quantitative backdrop, AZN stock is flashing a Bullish buying signal, thus warranting a closer look.

Taking an Alternative Approach to Capitalize on AZN Stock

In most financial publication stories, the temptation is to bombard the reader with a litany of news items and valuation ratios. A better approach is to compress the chaos of price discovery into root behaviors, which brings market breadth into focus.

As sequences of accumulative and distributive sessions, market breadth is effectively binary — the market is either a net buyer of a security or a net seller. By converting continuous price signals into discrete states, it’s much easier to establish patterns, profiles, and transitional probabilities.

Of course, specific company metrics, such as revenues, earnings, and costs, are essential in evaluating a stock. In AZN’s case, its earnings call reflects a strong start to 2025 with significant revenue and EPS growth, driven by pipeline advancements and strategic global manufacturing. However, challenges such as the redesign of Medicare Part D and headwinds in China, as well as the impact on Soliris revenue, present areas of concern.

In its most recent earnings call in April, AZN beat analyst EPS estimates of $1.12 to record a fifth straight quarter of expectation beats. Relative to the sector, AZN’s P/E ratio is also in line with the averages (P/E of 28, compared to the sector average of 27).

However, this article doesn’t intend to take a fundamental line towards forming a bullish hypothesis. Instead, I am taking a statistical approach based on probability.

Identifying an Options Strategy for AstraZeneca

In the past two months, AZN stock opened at $70.25 and closed last Friday at $69.45. By itself, this transition isn’t really remarkable. However, from a quantitative perspective, this trend can be classified as a “6-4-D” sequence: six up weeks, four down weeks, with a negative trajectory across the 10-week period.

Admittedly, this conversion process pancakes AZN’s magnitude dynamism into a simple binary code. However, the benefit is that market profiles can be segregated into distinct, discrete behavioral states, thus facilitating conditionally probabilistic insights from the study of past analogs.

For example, the 6-4-D sequence — a falsifiable pattern — has materialized 20 times since January 2019. It’s a relatively rare phenomenon, as despite the balance of accumulative sessions being greater than distributive, the trajectory over the 10-week period is bearish.

Still, this negativity statistically favors those betting on a sentiment reversal. In 65% of cases, the following week’s price action results in upside, with a median return of 1.39%. Should the bulls maintain control of the market, AZN stock could potentially push toward $72.40 over the next three weeks.

What makes the optimistic outlook tempting is that, as a baseline, the chance that a long position in AZN will be profitable is 54.12%. Therefore, the 6-4-D sequence theoretically adds almost 11 percentage points of favorable odds to the bullish speculator.

Those interested in playing the numbers game may consider the 68/72 bull call spread expiring July 25. This transaction involves buying the $68 call and simultaneously selling the $72 call, for a net debit paid of $214 (the maximum possible loss on the trade). Should AZN stock rise through the short strike price (72) at expiration, the maximum reward is $186, a payout of nearly 87%.

What is the Price Target for AstraZeneca?

On Wall Street, AZN stock carries a Strong Buy consensus rating based on six Buy, zero Hold, and zero Sell ratings over the past three months. AZN’s average stock price target of $86 implies approximately 23% upside potential over the next twelve months.

See more AZN analyst ratings

Statistical Tailwind Provides Timely Options Trade

While investors may find AstraZeneca’s potentially expanding oncology pipeline attractive, options traders also have reason to be excited. Thanks to a rare quantitative pattern that historically signals a sentiment reversal, AZN stock could potentially reward speculative traders.