LEGN WACC - Weighted Average Cost of Capital
The WACC of Legend Biotech Corp (LEGN) is 7.4%.
| Range | Selected | |
| Cost of equity | 6.2% - 8.9% | 7.55% |
| Tax rate | 0.7% - 5.3% | 3% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.1% - 8.8% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.51 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.2% | 8.9% |
| Tax rate | 0.7% | 5.3% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.1% | 8.8% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LEGN | Legend Biotech Corp | 0.06 | 0.65 | 0.61 |
| ALXO | ALX Oncology Holdings Inc | 0.53 | 1.56 | 1.02 |
| AMGN | Amgen Inc | 0.42 | 0.35 | 0.25 |
| APLS | Apellis Pharmaceuticals Inc | 0.21 | 0.96 | 0.8 |
| ARNA | Arena Pharmaceuticals Inc | 0.01 | 0.53 | 0.52 |
| CCXI | ChemoCentryx Inc | 0.01 | 1.22 | 1.22 |
| FGEN | FibroGen Inc | 2.9 | 0.8 | 0.21 |
| FOLD | Amicus Therapeutics Inc | 0.21 | 0.3 | 0.25 |
| GILD | Gilead Sciences Inc | 0.22 | 0.32 | 0.26 |
| PRLD | Prelude Therapeutics Inc | 0 | 0.19 | 0.19 |
| Low | High | |
| Unlevered beta | 0.26 | 0.56 |
| Relevered beta | 0.27 | 0.6 |
| Adjusted relevered beta | 0.51 | 0.73 |
LEGN'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 LEGN:
cost_of_equity (7.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.51) + 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.