UBS constructive on MCOs, favorites include Aetna, Cigna

"Because the President is looking for MCOs to work with the Administration in smoothing out the transition to the ACA, there is increasing investor perception that the sector may be to obtain some concessions in exchange for its help," UBS' A.J. Rice says, in a note on the managed care space.

Rice likes Aetna (AET +1.2%) and Cigna (CI +1.4%) based on "strong visibility on future growth, limited ACA exposure, [and] company specific catalysts," while UnitedHealth (UNH +0.3%) is also Buy-rated.

Price targets: AET, $82 (from $76); UNH, $84 (from $81); ELP $98 (from $87); HUM $95 (unchanged).

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