Allovir WACC - Weighted Average Cost of Capital
The WACC of Allovir Inc (ALVR) is 10.5%.
| Range | Selected | |
| Cost of equity | 12.6% - 19.3% | 15.95% |
| Tax rate | 0.0% - 0.1% | 0.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.8% - 12.2% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.9 | 2.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.6% | 19.3% |
| Tax rate | 0.0% | 0.1% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.8% | 12.2% |
| Selected WACC | 10.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALVR | Allovir Inc | 1.11 | -0.56 | -0.27 |
| ALEC | Alector Inc | 0.06 | 2.01 | 1.9 |
| ARQT | Arcutis Biotherapeutics Inc | 0.06 | 0.7 | 0.66 |
| CYTK | Cytokinetics Inc | 0.15 | 1 | 0.87 |
| DMTK | DermTech Inc | 0.03 | 2.09 | 2.04 |
| KURA | Kura Oncology Inc | 0.02 | 1.43 | 1.41 |
| MCRB | Seres Therapeutics Inc | 1.05 | 1.36 | 0.67 |
| QURE | Uniqure NV | 0.62 | 1.71 | 1.06 |
| REPL | Replimune Group Inc | 0.09 | 1.85 | 1.7 |
| VBIV | VBI Vaccines Inc | 13.32 | 1.21 | 0.08 |
| ZYME | Zymeworks Inc | 0 | 1.36 | 1.36 |
| Low | High | |
| Unlevered beta | 0.87 | 1.36 |
| Relevered beta | 2.34 | 3.36 |
| Adjusted relevered beta | 1.9 | 2.58 |
Allovir'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 Allovir:
cost_of_equity (15.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.9) + 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.