UPDATE 2-Pearson ups full-year education sales forecast

(Recasts, adds analyst comments, more detail, shares)

By Gavin Haycock

LONDON Oct 22 (Reuters) - Publisher Pearson has raised its full-year sales forecast for its professional education business and said third-quarter trading had been strong across the group, particularly in the United States.

Analysts reacted positively to the update on third-quarter and nine-month trading and an upbeat outlook for education published on Monday, given there had been concerns about Pearson's exposure to a weakening U.S economy. Pearson (PSON.L) generates around two-thirds of its sales in the United States.

"Whilst not completely immune from a downturn, we remain confident the education assets will be relatively resilient and the results today should reassure the market," said UBS.

Shares in Pearson were up 0.5 percent at 769 pence at 0826 GMT while the FTSE 100 .FTSE was more than 1 percent lower.

Pearson, which also publishes Penguin books and the Financial Times newspaper, raised its projection for full-year sales growth in its professional education division to 8 to 10 percent from 5 to 7 percent previously.

The unit's sales rose 12 percent in the nine months and further margin improvement is anticipated, Pearson said, amid ongoing strong demand for its professional certifications in areas such as graduate management, nursing and driving tests.

At a group level, Pearson said trading was strong in the third quarter and that underlying sales and operating profit rose 6 and 20 percent respectively over the first nine months.

The company said its headline sales rose 4 percent with operating profit up 17 percent in the same period.

"We still have a lot of trading ahead of us, but every part of the company is doing well," Pearson Chief Executive Marjorie Scardino said in a statement.

She said Pearson was benefiting from rapid take-up of its learning technologies, rises in audience and advertising at the Financial Times and efficiency gains within Penguin.

EPS UPGRADES ANTICIPATED

Numis Securities said it sees modest upside to its full-year pretax profit and earnings per share estimates. "With a yield of over 4 percent we regard Pearson as attractive in an uncertain market environment," Numis said in a research note.

ABN said it expects to raise its full-year EPS forecast to 44 pence from 43p.

Pearson said underlying education sales rose 7 percent over the first nine months and that it expects full-year sales growth in its schools segment around the top end of its 4 to 6 percent range with further margin improvements even after restructuring costs.

Sales within higher education rose 5 percent and the company is looking to worldwide full-year sales growth around the top end of the 3 to 5 percent range with stable margins.

Pearson said sales in its FT publishing division rose 8 percent and that advertising revenues had remained resilient during the recent volatility in global financial markets.

Penguin's sales rose 2 percent. The company gave no full-year forecasts but said it expects margins to improve.

The London-based company said it remains in exclusive talks with luxury goods group LVMH (LVMH.PA) over its proposed acquisition of French business daily newspaper Les Echos.

LVMH has offered 240 million euros ($342.8 million), 10 million euros less than a rival bid from French holding company Fimalac (LBCP.PA).

The third and fourth quarters are key for companies like Pearson doing business in the U.S. education publishing market as the start of the school year fuels textbook sales.

Shares in Pearson have underperformed the FTSE media sector .FTASX5550 by around 5 percent since the start of the year.

During the first half of the year the shares surged from 770 pence to five-year highs at 925p amid market speculation that the company was a prime break-up play before retreating to trade back around where they were at the beginning of the year.

UBS said mergers and acquisitions potential was not reflected in Pearson's current share price. Applying recent M&A transaction multiples in the education sector to Pearson suggests a best-case valuation of more than 1,200 pence, the broker said in a research note.