Forest Laboratories ( FRX) produced such a strong third quarter that the New York drugmaker was compelled to raise its guidance for the fiscal year ending March 31.

Forest said Tuesday that it earned $250.3 million, or 78 cents a share, for the three months ended Dec. 31. The results included a $10.2 million charge for stock-option expenses and a $20 million product-milestone payment.

Analysts polled by Thomson First Call had forecast 66 cents a share. For the same period last year, Forest earned $195.2 million, or 57 cents a share. Third-quarter revenue of $893 million topped the corresponding period's sales by 18%.

The company boosted its full-year EPS guidance to a range of $2.79 to $2.84 from the previous forecast of $2.60 to $2.65, the third higher earnings revision since July. The new guidance excludes the one-time charge related to the recent acquisition of Cerexa, a developer of anti-infective drugs. Forest paid $494 million and will take a charge of $1.54 during its fourth quarter.

Despite the positive news, shares of Forest behaved erratically, rising in early-morning trading, then falling on heavier-than-average volume. By early afternoon, the stock was down 79 cents, or 1.5%, to $52.98.

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