Massive Upgrade for Managed Care

Citi has upgraded shares of  Aetna, Cigna, Coventry, HealthSpring, UnitedHealth and WellPoint to “buy” from “hold,” but warns it’s a short-term opportunity:

Charging customers rates that are meaningfully in excess of underlying cost trends is not a sustainable long-term strategy, so pricing is likely to get more competitive. But there probably isn’t going to be evidence of this until much later in the year, and in the meantime, we believe the headlines will be dominated by big earnings upside. We still think the Medicare & Medicaid plans have more structurally attractive businesses for the long-term.



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