UPDATE: Goldman Sachs Downgrades Universal American Corporation to Sell on Medicare Advantage Risk

Goldman Sachs reduced its rating on Universal American Corporation (NYSE: UAM) from Neutral to Sell with an $8 price target. Goldman Sachs noted, "We downgrade Universal American to Sell from Neutral, reflecting our view of downside risk to earnings from its Medicare Advantage (MA) business given the scheduled funding reductions to MA under the health reform law (as context, MA represents over 70% of UAM earnings, by our estimate). Our Sell rating on UAM is relative to our Neutral coverage view of Managed Care. We see potential downside of 2% for UAM to our 12-month price target of $8 vs. 3% upside for our coverage group. Our updated analysis of reform impact, as well as a revisit of our margin assumptions, has led us to reduce our estimates."Universal American Corporation closed at $8.14 on Thursday.