ADAP WACC - Weighted Average Cost of Capital
The WACC of Adaptimmune Therapeutics PLC (ADAP) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.0% - 10.2% | 8.6% |
| Tax rate | 0.9% - 1.3% | 1.1% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 7.0% - 8.8% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.68 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.0% | 10.2% |
| Tax rate | 0.9% | 1.3% |
| Debt/Equity ratio | 0.74 | 0.74 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 7.0% | 8.8% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ADAP | Adaptimmune Therapeutics PLC | 0.74 | 0.2 | 0.12 |
| ALGS | Aligos Therapeutics Inc | 0 | 0.84 | 0.83 |
| ARDX | Ardelyx Inc | 0.16 | 0.25 | 0.22 |
| BTAI | BioXcel Therapeutics Inc | 12.92 | 1.28 | 0.09 |
| CLNN | Clene Inc. | 0.69 | 1.08 | 0.64 |
| CRTX | Cortexyme Inc | 0 | 0.92 | 0.92 |
| EPZM | Epizyme Inc | 0.94 | -0.39 | -0.2 |
| IMCR | Immunocore Holdings PLC | 0.34 | 0.63 | 0.47 |
| ABC.L | Abcam PLC | 0.08 | 0.39 | 0.36 |
| SLN.L | Silence Therapeutics PLC | 0 | 0.65 | 0.65 |
| Low | High | |
| Unlevered beta | 0.3 | 0.54 |
| Relevered beta | 0.52 | 0.93 |
| Adjusted relevered beta | 0.68 | 0.95 |
ADAP'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 ADAP:
cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.