Goldman Sachs Upgrades Aetna To Buy; Raises PT To $44

Goldman Sachs is upgrading Aetna AET to Buy from Neutral, reflecting its higher view of 2011-12 EPS and a new PT of $44, implying 18% upside. Goldman is also downgrading UnitedHealth to Neutral from Buy, reflecting less upside to the price target after recent outperformance, as well as potential risk to MA profit margins and from the MA risk score audits. Aetna shares have lagged the group even after the 12% gain on Friday and it thinks AET shares are poised to catch-up. Recent channel checks have eased its previous concerns on Aetna's service execution while confirming the company is now leading the group in price discipline. Aetna's surprisingly strong 2011 outlook provides the missing visibility on the MLR regulation impact and also highlights Aetna's generally lower exposure to health reform downside. AET closed Friday at $37.42