Avidity WACC - Weighted Average Cost of Capital
The WACC of Avidity Biosciences Inc (RNA) is 6.7%.
| Range | Selected | |
| Cost of equity | 7.4% - 11.9% | 9.65% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.6% - 7.8% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.77 | 1.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 11.9% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.6% | 7.8% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RNA | Avidity Biosciences Inc | 1.11 | 1.48 | 0.82 |
| ABBV | Abbvie Inc | 0.21 | 0.39 | 0.34 |
| ADAG | Adagene Inc | 0.22 | 0.48 | 0.42 |
| AMGN | Amgen Inc | 0.41 | 0.36 | 0.28 |
| AQB | AquaBounty Technologies Inc | 1.08 | 0.43 | 0.24 |
| CDMO | Avid Bioservices Inc | 0.2 | 1.95 | 1.7 |
| CVM | CEL-SCI Corp | 0.53 | 1.45 | 1.04 |
| GILD | Gilead Sciences Inc | 0.21 | 0.33 | 0.29 |
| KDMN | Kadmon Holdings Inc | 0 | 1.12 | 1.12 |
| MGTX | MeiraGTx Holdings PLC | 0.19 | 1.55 | 1.36 |
| MNKD | MannKind Corp | 0.22 | 0.75 | 0.65 |
| Low | High | |
| Unlevered beta | 0.42 | 0.82 |
| Relevered beta | 0.66 | 1.39 |
| Adjusted relevered beta | 0.77 | 1.26 |
Avidity'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 Avidity:
cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + 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.