GERN WACC - Weighted Average Cost of Capital
The WACC of Geron Corp (GERN) is 7.4%.
| Range | Selected | |
| Cost of equity | 6.4% - 9.4% | 7.9% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.0% - 8.7% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.55 | 0.81 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.4% | 9.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.15 | 0.15 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.0% | 8.7% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GERN | Geron Corp | 0.15 | 1.29 | 1.17 |
| ABBV | Abbvie Inc | 0.2 | 0.33 | 0.29 |
| AMGN | Amgen Inc | 0.38 | 0.38 | 0.3 |
| BCYC | Bicycle Therapeutics PLC | 0 | 1.66 | 1.66 |
| ETNB | 89Bio Inc | 0.02 | 1.6 | 1.57 |
| GILD | Gilead Sciences Inc | 0.2 | 0.35 | 0.31 |
| GMDA | Gamida Cell Ltd | 17.12 | 0.77 | 0.06 |
| ISEE | Iveric Bio Inc | 0.02 | 2.01 | 1.99 |
| NLTX | Neoleukin Therapeutics Inc | 0.01 | -0.35 | -0.35 |
| 950220.KQ | Neoimmunetech Inc (Pre-reincorporation) | 0.01 | 0.09 | 0.09 |
| Low | High | |
| Unlevered beta | 0.29 | 0.65 |
| Relevered beta | 0.33 | 0.72 |
| Adjusted relevered beta | 0.55 | 0.81 |
GERN'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 GERN:
cost_of_equity (7.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.55) + 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.