ABMD
ABIOMED Inc
Price:  
381.02 
USD
Volume:  
20,562,500.00
United States | Health Care Equipment & Supplies
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Abiomed WACC - Weighted Average Cost of Capital

The WACC of ABIOMED Inc (ABMD) is 6.5%.

The Cost of Equity of ABIOMED Inc (ABMD) is 9.10%.
The Cost of Debt of ABIOMED Inc (ABMD) is 5.00%.

Range Selected
Cost of equity 7.90% - 10.30% 9.10%
Tax rate 19.30% - 21.30% 20.30%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.9% - 7.1% 6.5%
WACC

Abiomed WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.87 0.97
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.90% 10.30%
Tax rate 19.30% 21.30%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 5.9% 7.1%
Selected WACC 6.5%

Abiomed's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for Abiomed:

cost_of_equity (9.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.87) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.