Big gains in profits and revenue at Sepracor ( SEPR) weren't enough for investors, as they punished the drugmaker's shares on Wednesday.

Although Sepracor beat Wall Street's expectations for the fourth quarter, its stock dropped $3.15, or 5.2%, to $57.06. The stock fell as low as $55.80.

Trading volume was five times the average for the company that makes the insomnia drug Lunesta and the asthma drug Xopenex.

The stock was hit because Marlborough, Mass.-based Sepracor predicted 2007's earnings per share, excluding items, would be approximately $2.25 a share, or 15 cents below the average estimate. The full-year revenue forecast of $1.46 billion was in line with the consensus of $1.44 billion from analysts polled by Thomson First Call.

Higher expenses and lower earnings guidance for this year were a "surprise," says David Steinberg of Deutsche Bank Securities in a research note to clients. He had been predicting 2007 earnings of $2.45 a share.

Steinberg kept his buy rating. His firm does, or seeks to do, business with companies covered in research reports.

The shock for this year overwhelmed the news for the fourth quarter, in which Sepracor earned $99.1 million, or 85 cents a share, on revenue of $357.2 million. The results included charges of $13.8 million, or 12 cents a share, for stock-based compensation.

Analysts had predicted fourth-quarter earnings of 62 cents a share on revenue of $341.3 million.

For the same period in 2005, Sepracor earned $36.9 million, or 31 cents a share, on revenue of $311.1 million.

For the full year, Sepracor earned $184.6 million, or $1.60 a share, on revenue of $1.2. billion. In 2005, the company earned $3.9 million, or 3 cents a share, on sales of $820 million.

Last year was Sepracor's first full year of operating profit, said Timothy Barberich, the CEO and chairman, in a conference call with analysts. "A great year by any measure, but still one we hope to surpass in 2007," he said.

For the fourth quarter, Lunesta's sales of $148 million came in slightly below many Wall Street forecasts, although the Xopenex franchise's sales of $201 million beat analysts' expectations.

This year, the company predicts Lunesta will produce sales of $685 million, up from $567 million in 2006. Xopenex should contribute $685 million, too, up from $555 million last year.

Sepracor's third product, the lung-disease drug Brovana, will reach the market during the second quarter. Approved by the Food and Drug Administration in October, Brovana will be prescribed for treating chronic obstructive pulmonary disease, including chronic bronchitis and emphysema.

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