The WACC of SpringWorks Therapeutics Inc (SWTX) is 5.9%.
Range | Selected | |
Cost of equity | 6.9% - 9.2% | 8.05% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.3% - 6.4% | 5.9% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.66 | 0.78 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.9% | 9.2% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.3% | 6.4% |
Selected WACC | 5.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SWTX | SpringWorks Therapeutics Inc | 1.12 | 1.03 | 0.57 |
950220.KQ | Neoimmunetech Inc (Pre-reincorporation) | 0.01 | 0.06 | 0.06 |
ABBV | Abbvie Inc | 0.2 | 0.31 | 0.27 |
ALXO | ALX Oncology Holdings Inc | 0.53 | 1.49 | 1.07 |
AMGN | Amgen Inc | 0.37 | 0.35 | 0.28 |
CCXI | ChemoCentryx Inc | 0.01 | 1.22 | 1.22 |
FGEN | FibroGen Inc | 4.24 | 0.55 | 0.13 |
GILD | Gilead Sciences Inc | 0.19 | 0.33 | 0.29 |
IMCR | Immunocore Holdings PLC | 0.32 | 0.87 | 0.7 |
LEGN | Legend Biotech Corp | 0.06 | 0.44 | 0.42 |
PRLD | Prelude Therapeutics Inc | 0 | 0.37 | 0.37 |
Low | High | |
Unlevered beta | 0.29 | 0.42 |
Relevered beta | 0.49 | 0.67 |
Adjusted relevered beta | 0.66 | 0.78 |
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 SWTX:
cost_of_equity (8.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.