PHAT
Phathom Pharmaceuticals Inc
Price:  
4.25 
USD
Volume:  
1,131,456.00
United States | Pharmaceuticals
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PHAT WACC - Weighted Average Cost of Capital

The WACC of Phathom Pharmaceuticals Inc (PHAT) is 5.9%.

The Cost of Equity of Phathom Pharmaceuticals Inc (PHAT) is 7.85%.
The Cost of Debt of Phathom Pharmaceuticals Inc (PHAT) is 6.75%.

Range Selected
Cost of equity 6.10% - 9.60% 7.85%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 6.50% - 7.00% 6.75%
WACC 5.2% - 6.7% 5.9%
WACC

PHAT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.48 0.85
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.10% 9.60%
Tax rate 26.20% 27.00%
Debt/Equity ratio 1.87 1.87
Cost of debt 6.50% 7.00%
After-tax WACC 5.2% 6.7%
Selected WACC 5.9%

PHAT'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 PHAT:

cost_of_equity (7.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.48) + 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.