PRTK WACC - Weighted Average Cost of Capital
The WACC of Paratek Pharmaceuticals Inc (PRTK) is 7.9%.
| Range | Selected | |
| Cost of equity | 6.3% - 14.1% | 10.2% |
| Tax rate | 0.2% - 0.3% | 0.25% |
| Cost of debt | 6.4% - 7.0% | 6.7% |
| WACC | 6.4% - 9.3% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.54 | 1.65 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 14.1% |
| Tax rate | 0.2% | 0.3% |
| Debt/Equity ratio | 2.01 | 2.01 |
| Cost of debt | 6.4% | 7.0% |
| After-tax WACC | 6.4% | 9.3% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PRTK | Paratek Pharmaceuticals Inc | 2.01 | 1.65 | 0.55 |
| AGRX | Agile Therapeutics Inc | 0.16 | -0.34 | -0.29 |
| BMY | Bristol-Myers Squibb Co | 0.52 | 0.13 | 0.08 |
| CBAY | Cymabay Therapeutics Inc | 0.03 | 0.93 | 0.91 |
| EOLS | Evolus Inc | 0.2 | 0.98 | 0.81 |
| JNJ | Johnson & Johnson | 0.1 | 0.1 | 0.09 |
| RDHL | Redhill Biopharma Ltd | 0.09 | 1.2 | 1.11 |
| RPRX | Royalty Pharma PLC | 0.37 | 0.15 | 0.11 |
| SEEL | Seelos Therapeutics Inc | 142.13 | 1.63 | 0.01 |
| XERS | Xeris Pharmaceuticals Inc | 0.31 | 1.16 | 0.89 |
| Low | High | |
| Unlevered beta | 0.1 | 0.66 |
| Relevered beta | 0.31 | 1.97 |
| Adjusted relevered beta | 0.54 | 1.65 |
PRTK'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 PRTK:
cost_of_equity (10.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.