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.