(Recasts; adds details from conference call, analysts' comments)
By Jennifer Robin Raj
BANGALORE, July 22 (Reuters) - Drug research instrument maker Waters Corp (WAT.N) posted second-quarter earnings that beat market estimates on strong sales in Asia, and raised its 2008 earnings outlook, sending its shares up 10 percent.
The company posted net income of $83.1 million, or 82 cents a share, compared with $59.9 million, or 59 cents a share, a year earlier. Revenue rose 13 percent to $398.8 million.
Waters, which competes with Thermo Fisher Scientific Inc (TMO.N) and Applied Biosystems Group ABI.N, earned 76 cents a share, excluding adjustments related to income tax and amortization expenses.
Analysts on average expected earnings of 71 cents a share, before exceptional items, on revenue of $394.7 million, according to Reuters Estimates.
Sales in Asia, excluding Japan, rose 22 percent during the quarter. Japan sales fell 6 percent, hurt by currency fluctuations. Europe sales grew 3 percent while U.S. sales were up 6 percent for the period ended June 28.
The key drivers of growth in the second quarter were strong demand from developing markets in Asia, continued expansion of the company's industrial businesses and sales in its instruments division, Chief Financial Officer John Ornell said on a conference call.
"(Waters) had a pretty good quarter in terms of demand from the drug industry as well as industrial customers. This is a trend we have seen the last few years and it really does not look like that has changed even though the broader economic environment remains challenging," Leerink Swann analyst Issac Ro said.
"It is a relief to investors that the spending environment for these products remain healthy," Ro, who has an "outperform" rating on the stock, said.
Waters is a bellwether of the research tools industry and strong results at the company bodes well for other players in the market.
On Tuesday, Waters raised its 2008 earnings outlook to $3.25 to $3.35 a share from its prior view of $3.20 to $3.30 a share. It expects revenue growth of 11 percent to 13 percent.
Analysts' average earnings forecast for the year is $3.27 a share.
The increased forecast is a sign that there is still significant momentum left in the business, despite a challenging macroeconomic environment, Deutsche Bank analyst Ross Muken wrote in a note to clients. Muken kept a "buy" rating and $78 price target on the stock.
For the third quarter, Waters expects to earn 73 cents to 77 cents a share, while analysts on average expect 72 cents a share. The company expects revenue to grow 11 percent to 12 percent.
Waters shares, which have risen more than 11 percent over the past year, jumped to a high of $68.50, before falling back to trade up $5.56 at $67.88 Tuesday morning on the New York Stock Exchange. (Editing by Pratish Narayanan)