NEW YORK – Aetna Inc shares dropped 5 percent and Health Net Inc tumbled 10 percent after a Goldman Sachs analyst slapped “sell” ratings on the two health insurers' stocks Thursday.

The downgrades by Goldman Sachs analyst Matthew Borsch, who had previously rated both stocks “neutral”, sent health insurer stocks down broadly, further worsening the performance of the group this year.

Aetna, the No. 3 U.S. health insurer, has been one of the few in the group to have stood by their 2008 profit forecasts, while earnings warnings from rivals have dragged down stocks this year.

But Goldman Sachs analyst Matthew Borsch said “our view is that the company cannot remain immune from the margin pressure impacting other carriers in the price-sensitive” commercial business of providing fully insured health plans.

Borsch maintained his 2008 earnings target for Aetna, saying he does not see immediate earnings downside, but cut his 2009 and 2010 estimates.

He cut his six-month price target on Aetna to $36 from $48.

Aetna shares fell $2.14, or 5.4 percent, to $37.65 in morning trading on the New York Stock Exchange. The shares fell as low as $36.24 earlier in the session, the lowest point in nearly two years.

Aetna shares have fallen some 34 percent this year, but that decline has actually outperformed most of its rivals.

Regarding Health Net, a smaller, regional carrier, Borsch said “we expect margin deterioration across most of the company's products this year.” He cut his six-month price target to $15 from $31.

Health Net shares fell $2.71, or 10.6 percent, to $22.93. Its shares are off some 52 percent this year.

The Morgan Stanley Healthcare Payor index , a broad gauge of health-insurer stocks, fell 3.8 percent, with shares of Cigna Corp , Humana and UnitedHealth Group each off more than 4 percent.

(Reporting by Lewis Krauskopf, editing by Dave Zimmerman)