Updated from 10:36 a.m. EDT

AstraZeneca

(AZN) - Get Report

posted a record profit for the first quarter thanks to a mixture of strong sales and effective cost cutting.

The Anglo-Swedish drug giant, which is the fifth-largest pharmaceuticals seller in the U.S., earned $1.04 billion, or 63 cents a share, on revenue of $5.74 billion for the three months ended March 31. For the same period last year, the company earned $799 million, or 47 cents a share, on revenue of $5.07 billion.

"This excellent start to the year has set us on track to deliver our financial targets for the year," said Sir Tom McKillop, the chief executive, in a prepared statement.

The company reaffirmed its full-year earnings per share prediction of $2.35 to $2.50. The consensus EPS estimate among analysts polled by Thomson First Call is $2.43.

In addition to a 13% increase in revenue, the company says it was able to continue achieving "progress on productivity, reducing quarterly administrative and R&D expenses by 4%.

The quarterly results didn't immediately change any opinions of analysts whose

views vary widely about the company. Shares were up 13 cents to $43.84.

"While the earnings growth ... looks impressive, we note that this is largely a function of the lack of pipeline spending and new drug launches that allow AstraZeneca to significantly reduce its operating cost base," says Graham Parry, of Merrill Lynch in a Thursday report reaffirming his neutral rating. "Our greatest concern...remains the strength of the pipeline on which there was no news. He doesn't own shares; his firm has an investment banking relationship.

Tim Anderson, of Prudential Equity Group, adds that he expects decent earnings improvement "for the next year or so, driven to a fair degree by decreased operational spending" vs. last year. "Earnings growth beyond 2005 remains a bit more uncertain," he says in a Thursday note to clients. Anderson is neutral on the stock. He doesn't own shares; his firm doesn't have an investment banking relationship.

Among major products, the ulcer/heartburn medication Nexium achieved 11% sales growth for the quarter to $1.06 billion; the antipsychotic Seroquel gained 39% to $633 million; the breast cancer drug Armidex grew by 49% to $256 million; and the cholesterol drug Crestor advanced by 106% to $273 million. Generic competition continued to take its toll on Prilosec, whose sales fell 25% to $427 million, and on the blood pressure drug Zestril, whose sales dropped 22% to $87 million.