Alkermes WACC - Weighted Average Cost of Capital
The WACC of Alkermes Plc (ALKS) is 7.1%.
| Range | Selected | |
| Cost of equity | 7.8% - 12.0% | 9.9% |
| Tax rate | 15.7% - 18.8% | 17.25% |
| Cost of debt | 4.5% - 5.7% | 5.1% |
| WACC | 5.8% - 8.3% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.86 | 1.28 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.8% | 12.0% |
| Tax rate | 15.7% | 18.8% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.5% | 5.7% |
| After-tax WACC | 5.8% | 8.3% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALKS | Alkermes Plc | 0.83 | 0.89 | 0.53 |
| APLS | Apellis Pharmaceuticals Inc | 0.19 | 1.02 | 0.88 |
| BLUE | bluebird bio Inc | 3.46 | 0.5 | 0.13 |
| BPMC | Blueprint Medicines Corp | 0.05 | 1.37 | 1.32 |
| FGEN | FibroGen Inc | 3.98 | 0.68 | 0.16 |
| FOLD | Amicus Therapeutics Inc | 0.21 | 0.52 | 0.44 |
| GBT | Global Blood Therapeutics Inc | 0.13 | 0.47 | 0.42 |
| IONS | Ionis Pharmaceuticals Inc | 0.19 | 0.88 | 0.76 |
| IRWD | Ironwood Pharmaceuticals Inc | 4.8 | 0.68 | 0.13 |
| LGND | Ligand Pharmaceuticals Inc | 0 | 0.96 | 0.96 |
| SRPT | Sarepta Therapeutics Inc | 0.64 | 1.2 | 0.78 |
| Low | High | |
| Unlevered beta | 0.44 | 0.76 |
| Relevered beta | 0.79 | 1.42 |
| Adjusted relevered beta | 0.86 | 1.28 |
Alkermes'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 Alkermes:
cost_of_equity (9.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.86) + 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.