EBS WACC - Weighted Average Cost of Capital
The WACC of Emergent BioSolutions Inc (EBS) is 7.7%.
| Range | Selected | |
| Cost of equity | 11.7% - 16.9% | 14.3% |
| Tax rate | 16.6% - 26.1% | 21.35% |
| Cost of debt | 4.9% - 7.0% | 5.95% |
| WACC | 6.5% - 8.9% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.71 | 2.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.7% | 16.9% |
| Tax rate | 16.6% | 26.1% |
| Debt/Equity ratio | 2.16 | 2.16 |
| Cost of debt | 4.9% | 7.0% |
| After-tax WACC | 6.5% | 8.9% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| EBS | Emergent BioSolutions Inc | 2.16 | 2.85 | 1.09 |
| APLS | Apellis Pharmaceuticals Inc | 0.21 | 0.96 | 0.83 |
| BPMC | Blueprint Medicines Corp | 0.06 | 1.35 | 1.29 |
| CCXI | ChemoCentryx Inc | 0.01 | 1.22 | 1.22 |
| HALO | Halozyme Therapeutics Inc | 0.19 | 0.83 | 0.72 |
| IONS | Ionis Pharmaceuticals Inc | 0.24 | 0.72 | 0.61 |
| IOVA | Iovance Biotherapeutics Inc | 0 | 1.73 | 1.73 |
| LEGN | Legend Biotech Corp | 0.06 | 0.65 | 0.62 |
| LGND | Ligand Pharmaceuticals Inc | 0 | 1.11 | 1.11 |
| SRPT | Sarepta Therapeutics Inc | 0.32 | 1.23 | 0.99 |
| UTHR | United Therapeutics Corp | 0.02 | 0.61 | 0.6 |
| Low | High | |
| Unlevered beta | 0.83 | 1.09 |
| Relevered beta | 2.06 | 2.72 |
| Adjusted relevered beta | 1.71 | 2.15 |
EBS'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 EBS:
cost_of_equity (14.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.71) + 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.