VRTX
Vertex Pharmaceuticals Inc
Price:  
501.15 
USD
Volume:  
1,652,414.00
United States | Biotechnology
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Vertex WACC - Weighted Average Cost of Capital

The WACC of Vertex Pharmaceuticals Inc (VRTX) is 8.5%.

The Cost of Equity of Vertex Pharmaceuticals Inc (VRTX) is 8.50%.
The Cost of Debt of Vertex Pharmaceuticals Inc (VRTX) is 6.65%.

Range Selected
Cost of equity 7.30% - 9.70% 8.50%
Tax rate 16.10% - 19.00% 17.55%
Cost of debt 4.50% - 8.80% 6.65%
WACC 7.3% - 9.7% 8.5%
WACC

Vertex WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.75 0.86
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 9.70%
Tax rate 16.10% 19.00%
Debt/Equity ratio 0 0
Cost of debt 4.50% 8.80%
After-tax WACC 7.3% 9.7%
Selected WACC 8.5%

Vertex'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 Vertex:

cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.75) + 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.