MORF WACC - Weighted Average Cost of Capital
The WACC of Morphic Holding Inc (MORF) is 7.5%.
| Range | Selected | |
| Cost of equity | 8.1% - 11.9% | 10% |
| Tax rate | 0.2% - 0.7% | 0.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.5% - 8.4% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.92 | 1.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.1% | 11.9% |
| Tax rate | 0.2% | 0.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.5% | 8.4% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MORF | Morphic Holding Inc | 1.07 | 2.56 | 1.24 |
| ABBV | Abbvie Inc | 0.21 | 0.39 | 0.32 |
| ADAG | Adagene Inc | 0.22 | 0.48 | 0.4 |
| AMGN | Amgen Inc | 0.41 | 0.36 | 0.26 |
| BCRX | BioCryst Pharmaceuticals Inc | 0.39 | 0.95 | 0.69 |
| GILD | Gilead Sciences Inc | 0.21 | 0.33 | 0.27 |
| HRTX | Heron Therapeutics Inc | 0.5 | 1.05 | 0.7 |
| MDGL | Madrigal Pharmaceuticals Inc | 0.02 | 0.48 | 0.47 |
| TVTX | Travere Therapeutics Inc | 0.25 | 1.93 | 1.54 |
| VCEL | Vericel Corp | 0 | 0.84 | 0.83 |
| XNCR | Xencor Inc | 0.29 | 2.06 | 1.61 |
| Low | High | |
| Unlevered beta | 0.47 | 0.7 |
| Relevered beta | 0.88 | 1.39 |
| Adjusted relevered beta | 0.92 | 1.26 |
MORF'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 MORF:
cost_of_equity (10.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.92) + 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.