UPDATE 1-Brokerages cut Amerigroup's price target; shares dive

(Adds Credit Suisse cut, Wachovia details; updates share movement)

June 11 (Reuters) - Four brokerages cut Amerigroup Corp's (AGP.N: Quote, Profile, Research) price target on Wednesday, a day after the health insurer suspended its 2008 profit outlook due to slow progress in rate-increase talks with the state of Tennessee, sending its shares to their lowest in more than two years.

Analysts say Amerigroup needs a rate increase in Tennessee to offset higher costs in the state.

Shares of Virginia Beach, Virginia-based Amerigroup fell as much as 16 percent to $22.80, before recovering some losses to trade down 12 percent at $23.92 in morning trade on the New York Stock Exchange.

The rate increase may not be finalized in time for second-quarter results and may not even be possible due to Tennessee's budget pressures, Goldman Sachs analyst Matthew Borsch said in a note to clients.

The analyst cut Amerigroup's price target to $27 from $30, maintaining a "neutral" rating.

"Results in Tennessee have deteriorated well beyond the negative trends seen in the first quarter," Lehman Brothers analyst Joshua Raskin said in a note to clients. He cut his price target to $30 from $32 and kept an "equal-weight" rating.

Amerigroup had earlier said it expected to earn $2.35 to $2.45 a share for 2008. On Tuesday, the company said it cannot update its outlook until the rate increase request is resolved. Analysts on average expect a profit of $2.29, before items, according to Reuters Estimates.

"Amerigroup didn't quantify the worst-case scenario, so we suspect the uncertainty to weigh heavily on the stock," Oppenheimer & Co analyst Carl McDonald said in a research note. McDonald cut the stock's price target by $7 to $33, but kept an "outperform" rating.