* Q2 EPS $0.96 ex-items vs est $0.88/shr
* Rev falls 14 pct
* Raises 2009 earnings forecast
* Shares rise 6 pct (Recasts; adds details, analyst comments, updates share movement)
By Bhaswati Mukhopadhyay
BANGALORE, July 27 (Reuters) - Diversified manufacturer Teleflex Inc (TFX.N) raised its 2009 earnings outlook, driven by expectations of core revenue growth in its medical business in the second half of the year, sending its shares up 6 percent.
Analysts expect the company to divest its aerospace and commercial businesses and become a pure-play medical company.
"I think Teleflex will be pure-play medical in the next two to three years," analyst Paul Joseph Mammola of Sidoti & Co said.
Teleflex -- which makes engineered products for medical, commercial and aerospace markets -- now sees 2009 income from continuing operations of $3.40 to $3.60 per share, excluding special charges, compared with its prior view of $3.25 to $3.55.
For the full year, the company expects the medical segment to generate low-single-digit core revenue growth.
"(the medical business) may not be a super high growth area, but it is very stable and a cash-flow generator," analyst David Turkaly of Susquehanna Financial Group said.
The medical business is immune to economic volatility as many of Teleflex's products are used in critical care, Turkaly said.
Teleflex -- whose medical products are used in critical care, surgical applications and cardiac care -- said it continues to evaluate potential bolt-on acquisitions in the medical space.
The medical segment accounted for 62 percent of the company's 2008 revenue and about 75 percent of its second-quarter revenue.
Teleflex acquired Arrow International -- a supplier of catheter-based medical technology products -- in the fourth quarter of 2007 to strengthen its medical business. Teleflex focuses on anti-microbial technology, particularly on products that control hospital-acquired infections, Susquehanna's Turkaly said.
"Longer term, the biggest opportunity for Teleflex is to take its anti-microbial technology and leverage it across all its medical products," Turkaly added.
For the second quarter, the company reported a net income of $6.8 million, or 16 cents a share, compared with $44.0 million, or 88 cents a share, a year ago.
Excluding special items, Teleflex earned 96 cents a share from continuing operations, beating analysts' average expectation of 88 cents. Revenue from continuing operations fell 14 percent to $483.1 million, hurt by a decline in core revenue and unfavorable currency impact.
Analysts on average were expecting revenue of $515.9 million, according to Reuters Estimates.
Aerospace segment revenue fell 44 percent, hurt by lower sales of wide body cargo handling systems and weak demand for cargo containers and actuators.
The company, however, said it sees improvements in its aerospace business in the second half of the year.
It also expects stronger sales in cargo handling systems, based on delivery reschedules provided by Boeing Co (BA.N) and Airbus EAD.PA.
Revenue at the commercial segment -- which makes driver controls, engine and drive assemblies for the marine market, power and fuel systems for automotive and industrial vehicles -- fell 25 percent in the second quarter.
Decline in sales of marine products and lower volumes of alternate fuel systems and rigging services were a drag on sales of this segment.
Medical segment revenue fell 5 percent to $363.9 million. Core revenue increases in cardiac care, urology, anesthesia and surgical products were offset by declines in respiratory and orthopedic devices, the company said.
Shares of the company rose $1.72 to $48.65 in afternoon trade on the New York Stock Exchange. They earlier touched a high of $49.70. (Editing by Ratul Ray Chaudhuri and Deepak Kannan)