Markus Andrews

CHICAGO, ILLINOIS – MAY 05: Bausch + Lomb eye vitamins are offered for sale at a drug store on May 05, 2022 in Chicago, Illinois. Bausch + Lomb parent company Bausch Health is spinning off the eye-care company with an upcoming IPO which will list on the New York Stock Exchange and TSX with the ticker symbol “BLCO”. (Photo by Scott Olson/Getty Images)
Scott Olson | Getty Images News | Getty Images

Bausch Health, formerly known as Valeant Pharmaceuticals, is a multinational specialty pharmaceutical company with global headquarters in Canada. It serves various therapeutic areas, including dermatology, gastroenterology, neurology and ophthalmology.
The company operates through five main business segments — Bausch + Lomb, Salix Pharmaceuticals, International Rx, Solta Medical and Diversified Products. Bausch Health remains a significant player in the health-care sector, particularly due to the strength of its Bausch + Lomb division in eye care.

Activist investor Carl Icahn filed a 13D with the U.S. Securities and Exchange Commission on Bausch Health on Feb. 11, 2021, stating that he intended to engage in discussions with the company’s management and board, regarding ways to enhance shareholder value. Those steps include the company’s strategic review, which was ongoing at the time, as well as possible board representation. Later that month, Icahn and the company entered into a director appointment and nomination agreement, pursuant to which the company agreed to increase the size of the board to 13 directors from 11 and appoint Icahn portfolio managers Brett Icahn and Steven Miller as directors.
In May 2022, Bausch + Lomb (BLCO) was spun off as a separate publicly traded entity, but it continues to be a core part of Bausch Health’s business through its retained 88% ownership. At that time, former Icahn portfolio manager Richard Mulligan was added to Bausch Health’s board. In June 2022, John Paulson was named chair, after previously serving on the board from June 2017 through May 2022. The board is presently comprised of 10 directors and includes Brett Icahn, Steven Miller and Richard Mulligan with John Paulson as non-executive chair.  

Stock chart icon

Bausch + Lomb’s 2024 performance

This past weekend, the Financial Times reported that BLCO retained Goldman Sachs to explore a sale of the company. BLCO presently has an enterprise value of roughly $10 billion, but this value is depressed by various factors including its control ownership by Bausch Health and the large amount of debt on Bausch Health’s consolidated balance sheet – $20.4 billion, of which $4.6 billion is BLCO debt that is consolidated at Bausch Health. As a result, a sale of control to a new entity would solve both issues and likely garner a much higher value than where BLCO presently trades. This would greatly benefit BLCO stockholders, of which Bausch Health is the largest.

Understanding valuations in event of a sale

BLCO’s estimated 2025 earnings before interest, taxes, depreciation and amortization is $966 million. Peers like The Cooper Companies and Alcon trade at a 19.5-times and 18.5-times enterprise value/EBITDA multiple, respectively. Assuming an average multiple for BLCO of 19-times yields an enterprise value of $18.35 billion. With $4.35 billion of net debt on the BLCO balance sheet, the implied equity value would be $14 billion. With 351.9 million shares outstanding, that is a per share equity price of $39.79. BLCO ended Friday’s session at $15.55 per share — that is, before the Financial Times’ report. As an 88% owner of BLCO, Bausch Health’s value derived from such a sale would be $12.32 billion.
Moreover, its four other divisions have an aggregate $2.45 billion of last 12 months’ EBITDA. The Salix division, which pertains to gastroenterology, has been the company’s most profitable division after Bausch + Lomb, with $2.25 billion of LTM revenue and $1.55 billion of LTM operating income. However, 87% of that business is derived from the Xifaxan drug, that comes off of patent in January 2028. With 3.5 years remaining under patent and assuming 5% annual revenue growth (growth was 6% last year), the Xifaxan business would have a present value of $4.25 billion assuming there are absolutely zero sales after 2027, which is an extremely conservative assumption. The value Bausch Health would attain from just the BLCO sale and the Xifaxan business would be more than enough to retire its $15.45 billion of remaining net debt, leaving a company with $1.43 billion of net cash and four profitable business lines (“RemainCo”) with an aggregate EBITDA of $­­1.17 billion, after allocating the full corporate overhead from Xifaxan that is not included in the Xifaxan valuation above.

So, what is RemainCo worth? The International Rx business’ (26.8% of RemainCo operating income) best peer is Recordati which trades at 15.99-times EV/EBITDA. The Diversified Products business (45.9% of RemainCo operating income) should be similar to lower-growth pharma businesses including Viatris and Organon & Co. which trade at 7.13-times and 8.37-times EV/EBITDA, respectively. The Solta medical business (12.3% of RemainCo operating income) is trickier. Peer InMode trades at only 4.23-times EV/EBITDA, but its revenue has declined 31.15% in the first half of 2024 versus the first half of 2023 while Solta’s revenue has grown at 18% during the same time period. That means Solta’s multiple should certainly be at a material premium to InMode. The last piece of RemainCo would be the remaining portion of Salix (the non-Xifaxan piece), which comprises 14.9% of RemainCo operating income and whose peers Takeda Pharmaceuticals and Ironwood Pharmaceuticals trade at 9.57-times and 9.72-times EV/EBITDA, respectively.
A valuation analysis for a company as complex as BHC using peer multiples is as much of an art as it is a science and certainly some of these multiples may be too high while other may be too low. While a weighted average multiple would be 9.8-times, we think using an 8-times multiple is fair. That would imply a value of $9.36 billion for RemainCo. Adding the value of the proceeds from BLCO sale, the Xifaxan cash flows and RemainCo yields a total value of $25.93 billion for Bausch Health. After subtracting 100% of the Bausch Health debt, that would yield an equity value of $10.49 billion or $28.19 per share. The stock ended Friday at $6.32.
Most articles about reported M&A announcements or explorations will include the phrase “the sale process may not result in a transaction” and this situation is no different. However, with four of 10 directors at Bausch Health being hedge fund portfolio managers and three of 10 at BLCO (Brett Icahn, Icahn portfolio manager Gary Hu and John Paulson), these boards do not think like the typical corporate board. Further, BLCO CEO Brent Saunders is a highly respected health-care CEO, but also a noted dealmaker and would likely not show the resistance normally seen from CEOs of companies being sold.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

Traders work on the New York Stock Exchange (NYSE) floor on September 13, 2024, in New York City.
Spencer Platt | Getty Images

Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox.
Here’s what CNBC TV’s producers were watching on Monday as the 30-stock Dow touched a new high and what’s on the radar for the next session.

Intel

The stock picked up ground after hours, jumping as much as 8%.
The company is creating a separate entity for the foundry side of the business.
Intel also announced it will produce custom artificial intelligence chips for Amazon Web Services.
CEO Pat Gelsinger told Jon Fortt and Morgan Brennan on “Closing Bell Overtime” on Monday that “we’ve taken it to a whole another level,” when speaking about the Amazon Web Services deal.
He also said his company’s new chip, 18A, is “making great progress.”
Speaking about last week’s board meeting, Gelsinger told Fortt and Brennan: “I and the board are aligned in the strategy for Intel foundry and moving to the next phase in the foundry journey.”
Shares closed higher by more than 6%, ending the session at $20.91. The 52-week high is $51.28, hit back on Dec. 27.

Stock chart icon

Intel shares in 2024

The Apple suppliers

Apple dropped 2.8% on Monday after a few analysts questioned early iPhone 16 orders.
Shares are 9% from the July 15 high.
Arm dropped 6%. It’s a big part of the new phone. The stock is 27% from the July 9 high.
Cirrus dropped 6% Monday as well, down 15% from the late August high.
Qorvo fell 6.7%. The stock is 23% from the mid-July high.
Skyworks fell 5% Monday. The stock is 20% from the July 16 high.
Broadcom fell 2.2%, and shares are 11.4% from the 52-week high.

Gold

The commodity hit a new high this morning before backing down and closing flat.
The VanEck Gold Miners ETF (GDX) hit a high on Monday morning. The ETF ultimately ended the day lower by 0.5%.
The GDX is up nearly 9% in a week. First Majestic, Coeur and New Gold are the best performers in the last week, all up about 30%. Anglogold, Westgold and Ramelius are the worst performers.

Stock chart icon

First Majestic’s performance in the past five trading sessions

China

Coffee

The commodity is up 10% in the last week and a half.
Dry weather in Brazil is being blamed.
Coffee is up 63% in a year.
Starbucks is flat in a year. The stock has been reacting to other news including Brian Niccol taking over as the new CEO.
J.M. Smucker owns Folgers. The stock is 10% from the February high and up 8% in three months. More

No one likes a surprise tax bill, and there is still time to take action if you have not paid enough taxes for 2024, experts say. 
Employees can use “back of the napkin math” to double-check 2024 withholdings, assuming your situation is similar to last year, said certified financial planner Tommy Lucas at Moisand Fitzgerald Tamayo.
If your tax situation has changed from 2023, you can use a free withholding tool from the IRS.

Yellow Dog Productions | The Image Bank | Getty Images

One way to estimate tax withholding

You can start by finding your total federal taxes paid for 2023, which is listed on line 24 of your tax return. If your gross income and tax situation has not changed from last year, you are likely to owe a similar amount for 2024, Lucas explained.   
Next, you will need to review your pay stubs.

If you have paid roughly 75% of last year’s total taxes by the end of September, “you’re going to be pretty darn close, assuming everything is the same as the prior year,” he said.  

However, “there’s a whole slew of things that can change” from year to year, such as a second job, higher income, divorce, marriage or birth of a child, which makes your tax situation different, Lucas said. 
In those scenarios, you will need a more in-depth analysis to double-check your 2024 withholding, he said.    

IRS tax withholding estimator

If your tax situation changed this year, experts recommend periodically using a free tool from the IRS, known as the “tax withholding estimator.”
The tool factors in your marital status, dependents, number of jobs, other sources of income, most-recent paystub, taxes withheld, estimated tax payments and other details.  
After plugging in your information, the IRS provides a prefilled Form W-4, which you can then provide to your employer to increase or decrease your withholding.

Alternatively, you could make payments directly to the IRS to cover your 2024 tax shortfall, Lucas said.
Either way, “you’ve got to keep an eye on it,” or you could face an unexpected tax bill, along with penalties and interest, said Mark Steber, chief tax information officer at Jackson Hewitt.

What to know after updating your withholding

If you update your tax withholding via Form W-4, you will want to make sure the change is accurate and reflected in future paychecks through the end of the year, Lucas said.
But your withholding should be temporary through 2024 and you will need to resubmit Form W-4 again in January, he warned. Otherwise, you could withhold too much for 2025. 

Don’t miss these insights from CNBC PRO More

The Consumer Financial Protection Bureau reached a $120 million settlement with Navient that may lead to compensation for hundreds of thousands of borrowers.
The CFPB has not spelled out who will qualify for the consumer redress, said higher education expert Mark Kantrowitz.
Still, “there are some clues in the settlement” about eligibility, Kantrowitz said.

jetcityimage

The Consumer Financial Protection Bureau last week said it had reached a $120 million settlement with student loan giant Navient that could lead to compensation for hundreds of thousands of borrowers.
The CFPB accused Navient of steering student loan borrowers into expensive forbearances, miscalculating their bills and tarnishing their credit reports. Under the terms of the settlement, Navient is banned from servicing federal student loans ever again.

A Navient spokesperson said the company disagreed with the consumer watchdog’s charges.
As part of the deal, $100 million will be used to make payments to impacted customers, as determined by the CFPB. The remaining $20 million will go to the CFPB’s civil penalty fund.
Here’s what to know about the bureau’s upcoming relief.

Who may qualify for the checks

The CFPB has not spelled out who will be eligible for the consumer redress, explained higher education expert Mark Kantrowitz.
Still, “there are some clues in the settlement,” about who might receive the checks, he said.

Borrowers may not need to apply for relief

“It is likely that eligible borrowers will be identified automatically,” Kantrowitz said.
That means borrowers shouldn’t have to do anything to get the compensation.
The CFPB also warned people not to fall for scams during this time.
“The CFPB will never require consumers to pay money to obtain redress, nor will we ask for additional information before consumers can cash a redress check that we’ve issued,” the bureau wrote.

Don’t miss these insights from CNBC PRO More

Concerns over rising college costs and student loan debt are causing some high schoolers to choose more career-connected pathways over a four-year degree.
Increasing opportunities in the skilled trades with a secure job track and high earnings potential are helping transform Generation Z into the so-called “toolbelt generation.”

Luminola | E+ | Getty Images

Four years after the Covid pandemic began, there are more than 900,000 fewer undergraduates enrolled in college.
The overall rate of high school graduates choosing to enroll in college held steady in 2023, compared to a year earlier, according to a recent report from the National Student Clearinghouse Research Center — which Doug Shapiro, the Center’s executive director, said was “an optimistic sign.” Although the data shows the rate of high school graduates enrolling within a year of their graduation is significantly higher for students from low poverty high schools.

“Large and widening gaps for low-income students continue to be a cause for concern,” Shapiro said.
More from Personal Finance:These are the top 10 highest-paying college majorsThe sticker price at some colleges is now nearly $100,000 a yearMore of the nation’s top colleges roll out no-loan policies
Increasingly, worries over rising costs and large student loan balances are causing some high schoolers to make alternative plans after high school, a separate report by Junior Achievement and Citizens found. Junior Achievement and Citizen polled 1,000 teenagers between the ages of 13 and 18 in July.
Roughly half, or 49%, believe a high school degree, trade program, two-year degree or other type of enrichment program is the highest level of education needed for their anticipated career path.
Even more, 56%, believe that real world and on-the-job experience is more beneficial than obtaining a higher education degree.

“Teens are starting to get a clearer idea, if they are not going to go the college route, of what the alternatives might be,” said Ed Grocholski, chief marketing officer at Junior Achievement. Advancements in artificial intelligence and technology training have also helped change the equation for some young people, Junior Achievement found.

‘You may not necessarily need a college degree’

“While cost is a factor, there’s also the recognition that you may not necessarily need a college degree to be successful,” Grocholski said. “That message is really starting to get to young people.”
Between online credits and certifications, there are more career-connected pathways available at a lower cost, according to Grocholski. “College is one pathway I can take, but then there are other pathways — that wasn’t as clear a few years ago,” he said.
A separate study commissioned by EdAssist by Bright Horizons underscored the role student loan debt has played in rethinking the value of college.
Now, 86% of U.S. workers with education debt said their degree wasn’t worth the toll that student loans has had on their overall well-being. Further, 53% of workers said that knowing they would incur additional debt has prevented them from pursuing more education, according to Bright Horizons’ fourth annual education index, which in May polled more than 2,000 adults who are employed either full- or part-time.

The rise of the ‘toolbelt generation’

With college costs now nearing six-figures a year and a ballooning student loan problem, more would-be students are pursuing careers in skilled trades, other studies show. 
Over 2012 to 2021, the number of registered apprentices rose 64%, according to data from the U.S. Department of Labor, especially in industries such as construction, public administration and education.
From 2022 to 2023, alone, enrollment in vocational programs jumped 16%, the National Student Clearinghouse found.
A shortage of skilled tradespeople, due to experienced workers aging out of the field, is also boosting the number of job opportunities and pay.  
“The great news about economics is the law of supply and demand,” said certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta and a member of CNBC’s Financial Advisor Council.

The college affordability crisis and the rise of alternative career pathways, together, have helped transform Generation Z into the so-called “toolbelt generation,” Jenkin said. And many are benefitting from the secure job track and high earnings potential these vocational jobs now provide.
“The delta between white-collar jobs and good blue-collar jobs is not that big anymore,” Jenkin said.
Federal data also shows that trade school students are more likely to be employed after school than their degree-seeking counterparts — and much more likely to work in a job related to their field of study.
Subscribe to CNBC on YouTube. More

A McDonald’s fast-food restaurant in Manhattan, New York, on July 6, 2024.
Beata Zawrzel | Nurphoto | Getty Images

September had a bumpy start for investors as volatility jolted markets in the first week, but dividend-paying stocks can help smooth the ride.
Investors with a long-term investment horizon can ignore short-term noise to focus on stocks that have the potential to enhance their total portfolio returns through a mix of dividends and share price appreciation.

To that end, the recommendations of top Wall Street analysts can help investors choose stocks with strong fundamentals and the ability to pay consistent dividends.
Here are three dividend stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
MPLX LP                                
We start this week with MPLX (MPLX), a midstream energy player. The company’s quarterly cash distribution was 85 cents per common unit ($3.40 on an annualized basis) for the second quarter of 2024. MPLX offers an attractive yield of nearly 8%.
Recently, RBC Capital analyst Elvira Scotto reiterated a buy rating on MPLX stock with a price target of $47. The analyst updated her model to reflect the company’s solid second-quarter results, with adjusted earnings before interest, taxes, depreciation and amortization surpassing the Street’s estimate by 3%.
Scotto raised her adjusted EBITDA estimates for 2024 and 2025 to reflect the strong performance of the Logistics & Storage segment in Q2 and some consolidation of joint venture interests. The analyst maintained her distribution per unit estimate of $3.57 for 2024 and $3.84 for 2025.

Scotto continues to view MPLX as “one of the most attractive income plays among large-cap MLP [master limited partnership],” thanks to its robust yield and rising free cash flow generation. The analyst thinks that MPLX’s solid free cash flow will help the company to continue to grow its business and enhance shareholder returns through buybacks.
The analyst also highlighted that MPLX is expanding its natural gas and natural gas liquids assets across its integrated network via organic projects, joint venture interests and bolt-on acquisitions.
Scotto ranks No. 18 among more than 9,000 analysts tracked by TipRanks. Her ratings have been profitable 69% of the time, delivering an average return of 20.8%. (See MPLX Options Trading on TipRanks) 
Chord Energy
We move to another dividend-paying energy stock, Chord Energy (CHRD). It is an independent oil and gas company operating in the Williston Basin. The company recently paid a base dividend of $1.25 per share of common stock and a variable dividend of $1.27 per share.
On Sept. 4, RBC Capital analyst Scott Hanold reaffirmed a buy rating on CHRD stock with a price target of $200. The analyst increased his earnings per share and cash flow per share estimates for 2024 and 2025 by nearly 3% to reflect modestly higher production and lower cash operating costs. 
Hanold expects free cash flow of $1.2 billion and $1.4 billion in 2024 and 2025, respectively. The analyst anticipates that FCF will increase in the second half of 2024 due to the combination of the assets of Chord Energy and Enerplus, which the company acquired earlier this year.
Commenting on the Enerplus integration, the analyst said, “We remain optimistic the company is well-positioned to not just meet but potentially exceed the synergy target as operations are fully integrated.”
Further, the analyst expects quarterly distribution of $4.50 to $5.00 per share in the second half of 2024, with dividends accounting for about 60% of the distributions and buybacks amounting to 40%.
Hanold ranks No. 27 among more than 9,000 analysts tracked by TipRanks. His ratings have been successful 63% of the time, delivering an average return of 25.4%. (See Chord Energy Stock Buybacks on TipRanks)  
McDonald’s
This week’s third pick is fast-food chain McDonald’s (MCD). MCD stock offers a dividend yield of 2.3%. McDonald’s is a dividend aristocrat that has raised its dividends for 47 consecutive years.
On Sept. 3, Tigress Financial analyst Ivan Feinseth reiterated a buy rating on MCD stock and raised his price target to $360 from $355. Despite a challenging backdrop, the analyst continues to be bullish on McDonald’s due to its ongoing technology initiatives, innovation and value focus. These factors support its resilient business model and long-term growth potential.
Feinseth noted that the company is focused on enhancing its value offerings to regain its competitive edge. The analyst highlighted several recent value deals introduced by McDonald’s, including the $5 meal deal, which helped improve its image as a fast-food chain offering value and affordability.
Further, Feinseth pointed out MCD’s competitive advantage, which is backed by its solid brand equity, loyalty program and digital initiatives. The company boasts a loyalty membership base of 166 million members. It is targeting 250 million active loyalty members by 2027.
The analyst also noted that McDonald’s is making capital investments between $2 billion and $2.5 billion annually to expand its store footprint and improve its technology, including through enhancing its ordering capabilities through automated voice artificial intelligence. Overall, Feinseth is confident about MCD’s long-term growth potential and its ability to boost shareholder returns through dividends and share repurchases. In fact, he expects MCD to announce a dividend hike in October, similar to the 10% rise announced last year.
Feinseth ranks No. 210 among more than 9,000 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, delivering an average return of 11.9%. (See McDonald’s Insider Trading Activity on TipRanks)  More

Holiday travelers, or those who plan to travel for Thanksgiving, Christmas or New Year’s, should get ready to book their flights in October.
If you miss that window, “one good day to bookmark” is Dec. 3, or Travel Tuesday, according to Hayley Berg, lead economist at travel site Hopper.

d3sign | Moment | Getty Images

If you want — or need — to travel this holiday season, start planning now because the ideal time to book Thanksgiving, Christmas and New Year’s travel is fast approaching. 
“The most important thing is for travelers to continue to think about planning now and booking in October,” said Hayley Berg, lead economist at travel site Hopper. “That window of low prices is brief, but it can really pay off.”

More from Personal Finance:American demand for international trips drives ‘travel momentum’Relocating retirees want lower costs of livingHomeowners may be ‘overconfident in their retirement readiness’
But travelers who miss that window might have a last resort: so-called Travel Tuesday, which is the Tuesday after Thanksgiving, Black Friday and Cyber Monday. 
That day, “pretty much the whole travel industry goes on sale,” said Berg.
Whenever you decide to confirm your reservations, keep in mind that traveling during the holiday season can be fraught with complications, said Sally French, a travel expert at NerdWallet.
“The holidays are a difficult time to travel because not only are you dealing with what’s likely to be tougher holiday weather, but also working with bigger crowds,” said French.

Here’s how to make sure you’re getting a good value. 

When prices will be at their lowest

Prices for holiday travel are slightly higher compared to this time last year, said Berg.
On average, round-trip flights for Thanksgiving — defined as departures from Nov. 24 to 28 — currently cost about $298, according to Hopper’s 2024 Holiday Travel Outlook report. That is up 10% from a year ago and 3% from pre-pandemic levels, the travel site found. 
Prices are expected to fall by about $40 on average until they reach their lowest level in early October, when prices will likely be in line with 2023 levels, the report noted.
Similarly, airfare for Christmas trips — defined as the week of Dec. 21 to 25 — are hovering at an average $406 per round-trip booking, up 4% from a year ago and 13% from pre-pandemic, per Hopper.

However, prices are expected to fall by about $80 from current levels until they reach their lowest point in October, according to the report.
“It’s really important for travelers to be thinking about booking their travel now, so that when October rolls around, they’re ready,” said Berg. 
If you are “super last-minute and want to book something for Christmas or New Year’s,” according to Berg, “one good day to bookmark” is Dec. 3, or this year’s Travel Tuesday. 
“You might get lucky and … swing something last minute,” said Berg, as the deals that day can include major discounts on hotel stays, airfare and rental cars. 

How to avoid holiday the travel ‘domino effect’

During the holiday season, disruptions are more likely to happen because airlines and airports are operating more flights than usual, and bigger crowds can lead to “domino effect” issues, experts say.
An example: if one flight is 15 minutes late pulling away from a gate, that can affect the flow of air traffic for an entire terminal, said Berg.
But the “biggest risks” are usually inclement weather and technical malfunctions, she said.

You might get lucky and … swing something last minute.

Hayley Berg
Lead economist at Hopper

Here are four key things to consider:

Avoid flying on peak days. For example, around Thanksgiving, avoid the Sundays before and after the holiday, experts say. In the past years, the Sunday after Thanksgiving set records as the busiest day to fly, or the number of travelers passing through TSA checkpoints, said French.

Take the first flight of the day. Try to book one of the first flights of the day because you avoid being affected by delays and cancellations, said Berg. You’re two times more likely to be affected by flight delays or cancellations after 8 a.m., she said.

Allow time for delays and cancellations. If it’s critical for you to be at your destination, “bake in extra time to get there,” and travel a few days in advance, said French. “If it’s really important that you’re there for actual Christmas dinner, fly in a few days early,” she said.

Broaden your search. It can be helpful to know what other airports are nearby, said French. If you know of other airports, it may help you find more affordable options. It could end up being a longer drive to get to your destination, but it can make sense if it’s critical you get there, she said. More