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J.P. Morgan Ups Kindred Healthcare to 'Overweight'


J.P. Morgan upgraded Kindred Healthcare (KIND) to overweight from neutral.

On Tuesday Kindred announced the divestiture of Florida and Texas nursing centers. Analyst Matt Ripperger says he views the closure of the transaction on schedule as a potential company reshaping event. He says Florida and Texas accounted for roughly 50% of Kindred's patient-liability costs.

Ripperger thinks the second half of the year should more accurately reflect the underlying profitability of Kindred's skilled nursing facility business. He believes Kindred's enterprise value of $370 million is compelling, assuming the skilled nursing facility business stabilizes.

He widened his 18-cent second-quarter loss estimate to a 31-cent loss due to the divestiture, and raised the $1.83 2004 earnings per share estimate to $2.00.


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