AstraZeneca ( AZN) delivered a third-quarter financial report Thursday that beat Wall Street's estimates and prompted the drugmaker to raise its earnings per share estimate.

The Anglo-British company lifted its full-year earnings target to a range of $2.85 to $2.90 a share from $2.75, marking the second upward revision in 2005. The average estimate among analysts polled by Thomson First Call was $2.79 for the year.

AstraZeneca produced an operating profit of $1.7 billion, or 76 cents a share, on sales of $5.79 billion. The third-quarter consensus was for EPS of 67 cents with sales of $5.75 billion.

For the same period last year, AstraZeneca recorded an operating profit of about $1.2 billion, or 68 cents a share, on revenue of $5.27 billion. The quarter was aided by two one-time gains worth 17 cents a share.

However, the latest results weren't greeted warmly by investors, as shares dropped $1.11, or 2.4%, to $44.92, by late morning in heavy trading.

The third quarter was marked by strong performance from several of AstraZeneca's biggest drugs, mixed results among experimental compounds and a flurry of patent challenges against major products.

In September, generic drugmakers filed applications with the Food and Drug Administration to break AstraZeneca's patents on Diprivan, an injectable anesthetic; the schizophrenia drug Seroquel; a version of the asthma drug Pulmicort; and the blood pressure drug Toprol XL. In October, a generic company asked the FDA for permission to make a copycat version of Nexium for severe heartburn.

AstraZeneca says it is evaluating these challenges, adding that it has "full confidence in its intellectual property" supporting these products. The company has filed patent infringement suits relating to Pulmicort and Toprol XL. An earlier patent dispute involving Toprol XL is scheduled for trial in February. AstraZeneca is the fifth-biggest seller of pharmaceuticals in the U.S.

During the quarter, AstraZeneca was paced by Seroquel, its second-biggest product, whose worldwide sales jumped 32% to $706 million. Nexium, the top seller, posted sales $1.13 billion, up 18% from the same period last year. Sales of Toprol XL advanced 23% to $437 million.

The asthma drug Symbicort, which isn't available in the U.S, saw sales climb 28% to $240 million. The company filed an application with the FDA last month to try to get clearance for the drug. The breast cancer drug Arimidex gained 36% to $303 million. The cholesterol drug Crestor advanced 23% to $325 million.

The company's R&D news produced some ups and downs, says Mark Purcell of Deutsche Bank Securities in a Thursday research report. An experimental cancer drug continues in clinical trials, but a prospective drug for overactive bladder has been scrapped. Research on a pill for erratic heartbeats has been canceled, but clinical trials continue on the intravenous form of the medication.

A combination of strong sales trends for several big drugs and "disciplined cost management" encouraged Purcell to retain a buy rating, although other analysts are less enthusiastic because of what they perceive as uncertain prospects for experimental drugs, such as Galida for diabetes and Cerovive for stroke.

The keys to near-term growth, Purcell says, will be Crestor, Nexium and Seroquel, as well as the evolution of the U.S. cholesterol drug market. Crestor belongs to a group of drugs known as statins, which includes Pfizer's ( PFE) Lipitor, Merck's ( MRK) Zocor and Bristol-Myers Squibb's ( BMY) Pravachol. Zocor and Pravachol lose U.S. patent protection next year.

Last week, Pfizer reported softening Lipitor sales , adding that it didn't know if the trend was temporary or permanent. In addition, Pfizer expects to hear a judge's verdict on a patent challenge to Lipitor in a few months.

Pfizer successfully defended a major Lipitor patent in the U.K. recently, but a Pfizer defeat in the U.S. will have a ripple effect on the entire market, Purcell says. If Pfizer loses, Crestor's U.S. market share could stall, hurting AstraZeneca's long-term EPS estimates by 5% or 6%.

Purcell doesn't own shares, but his firm plans to receive or seek investment-banking compensation from AstraZeneca in the next three months.