ALKS
Alkermes Plc
Price:  
30.28 
USD
Volume:  
1,483,309.00
Ireland | Biotechnology
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Alkermes WACC - Weighted Average Cost of Capital

The WACC of Alkermes Plc (ALKS) is 7.1%.

The Cost of Equity of Alkermes Plc (ALKS) is 9.90%.
The Cost of Debt of Alkermes Plc (ALKS) is 5.10%.

Range Selected
Cost of equity 7.80% - 12.00% 9.90%
Tax rate 15.70% - 18.80% 17.25%
Cost of debt 4.50% - 5.70% 5.10%
WACC 5.8% - 8.3% 7.1%
WACC

Alkermes WACC calculation

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 7.80% 12.00%
Tax rate 15.70% 18.80%
Debt/Equity ratio 1 1
Cost of debt 4.50% 5.70%
After-tax WACC 5.8% 8.3%
Selected WACC 7.1%

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.