BridgeBio WACC - Weighted Average Cost of Capital
The WACC of BridgeBio Pharma Inc (BBIO) is 7.5%.
| Range | Selected | |
| Cost of equity | 6.9% - 10.4% | 8.65% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.6% - 7.0% | 5.8% |
| WACC | 6.0% - 9.0% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.65 | 0.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 10.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 4.6% | 7.0% |
| After-tax WACC | 6.0% | 9.0% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BBIO | BridgeBio Pharma Inc | 0.34 | 0.92 | 0.74 |
| ABBV | Abbvie Inc | 0.2 | 0.33 | 0.29 |
| AMGN | Amgen Inc | 0.39 | 0.37 | 0.29 |
| EDIT | Editas Medicine Inc | 0.4 | 2.06 | 1.6 |
| GILD | Gilead Sciences Inc | 0.2 | 0.33 | 0.29 |
| INSM | Insmed Inc | 0.09 | 0.89 | 0.84 |
| MDGL | Madrigal Pharmaceuticals Inc | 0.02 | 0.45 | 0.45 |
| NTRA | Natera Inc | 0 | 0.96 | 0.96 |
| PTCT | PTC Therapeutics Inc | 0.62 | 1.48 | 1.02 |
| SRNE | Sorrento Therapeutics Inc | 49.4 | -0.73 | -0.02 |
| Low | High | |
| Unlevered beta | 0.38 | 0.78 |
| Relevered beta | 0.48 | 0.97 |
| Adjusted relevered beta | 0.65 | 0.98 |
BridgeBio'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 BridgeBio:
cost_of_equity (8.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.65) + 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.