AVROBIO WACC - Weighted Average Cost of Capital
The WACC of AVROBIO Inc (AVRO) is 8.5%.
| Range | Selected | |
| Cost of equity | 10.7% - 16.0% | 13.35% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.2% - 9.8% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.47 | 1.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.7% | 16.0% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.2% | 9.8% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AVRO | AVROBIO Inc | 0.8 | 1.01 | 0.64 |
| BCYC | Bicycle Therapeutics PLC | 0 | 1.76 | 1.76 |
| ETNB | 89Bio Inc | 0.03 | 1.93 | 1.89 |
| GERN | Geron Corp | 0.13 | 1.63 | 1.49 |
| GMDA | Gamida Cell Ltd | 17.12 | 0.77 | 0.06 |
| ISEE | Iveric Bio Inc | 0.02 | 2.01 | 1.99 |
| MRNA | Moderna Inc | 0.01 | 1.03 | 1.02 |
| NLTX | Neoleukin Therapeutics Inc | 0.01 | -0.35 | -0.35 |
| OYST | Oyster Point Pharma Inc | 0.3 | 1.01 | 0.83 |
| SMMT | Summit Therapeutics Inc | 0.93 | 3.26 | 1.94 |
| SPRB | Spruce Biosciences Inc | 0.53 | 0.74 | 0.54 |
| Low | High | |
| Unlevered beta | 0.83 | 1.49 |
| Relevered beta | 1.7 | 2.46 |
| Adjusted relevered beta | 1.47 | 1.98 |
AVROBIO'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 AVROBIO:
cost_of_equity (13.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.47) + 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.